TPT on the VFM podcast (DB, DC , mastertrust, superfund and CDC)

Posted on March 23, 2026 by henry tapper
Ruari Grant
Phil Smith

I think I deserve a medal for lasting the full 83 minutes + of this blog  but I did and though it didn’t talk about what I wanted to know more about (CDC and superfunds), it was good to hear about the set up at TPT.

What surprises me about TPT is that they are doing so much. They have revamped their DC master trust to allow members to get flex and fix style decumulation and will be bringing in a new approach where members will be able to be paid an income till they are 95 and then get a lump sum from what’s left over (typically to pay for care).

There is also an UMES CDC being launched in 2027 (subject to authorisation by TPR) and talk of a retirement CDC plan at the back of the decade. I am really pleased that TPT are doing this, there are very few organisations willing to be proprietor of a whole of life CDC and employers really need access to an authorised UMES CDC.

Then there is the DB business that is primarily legacy and a master trust for DB schemes who want to be under an umbrella.

Andy O’Regan , an actuarial strategist, runs the CDC side of things but sadly was not on the podcast with Phil Smith and Ruari Grant so we didn’t get much discussion of the topic , but we are promised more at a later stage.

I must say it would be interesting to hear not just from TPT but from the Church of England who will be launching a similar “UMES” CDC Scheme and the mysterious Orca, who are said to be launching a superfund for DB schemes.

What is clear is that TPT spend a lot of time with the Government discussing all these things and Ruari is the spokesperson, dealing with formal responses to Government while others get involved with matters more strategic to the TPT business.

It was interesting to hear from Ruari that he’s up and about , despite a crushing break of his leg which has laid him low. I saw him briefly in Edinburgh but too briefly to commiserate properly.

It was also to hear from Nico that he’d spoken to a number of DB schemes at the Pensions UK conference who are looking to launch a DC scheme within their DB trust to efficiently deliver surplus to members disadvantaged by not getting a DB pension. I wondered if any of these employers were considering running a single employer or UMES CDC scheme within the existing scheme. The surplus can be useful in offering the reserve that is needed for a CDC proprietor to get the scheme authorised.

The main subjects of the meeting surrounded VFM and the Size considerations DC plans must have in future. It is certainly ambitious for TPT to run a CDC scheme (not subject to size) , a DC master trust (subject to VFM and size) a Superfund , a DB master trust and an umbrella for existing DB schemes (which I didn’t quite work out).

But the lads clearly had time on their hands and the pod neatly fitted into the 90 minutes of the League Cup Final which I could watch with the sound turned down. Arsenal will now be able to focus on a smaller number of competitions, perhaps a lesson there for others?

Posted in pensions | Tagged , , , | Leave a comment

What matters most to people about the state pension?

Posted on March 23, 2026 by henry tapper

Torsten Bell has tough choices to make on the state pension.

The state pension age matters to everyone still to get it.

I  worked most of my life expecting to receive my state pension when I’d be 65; I’d be a pensioner in 8 months time had that conjecture held true. But my state pension age increased to 66 and then a 2020 review raised it to 67 so I have two years to wait.

I can put up with it, I’m still working and can balance not being a pensioner against having another 25 years to live (I live in a posh place). But not everyone is as lucky as me; people in Oldham have seen their life expectancy fall over the past few years. For one reason or another, many people in poor areas do not receive the full state pension.

Why should I expect the same pension when I’ll receive it for a longer period and have had the chance to save all my life into personal and company pensions? This opportunity has meant I’m doing well.

Shouldn’t what the state pays out be based on people’s means and how adequate their pension is?

Should I have the same state pension age as someone my age in Oldham?

These are the kind of questions Baroness Jeannie Drake has to consider as she conducts the first part of her Pensions Commission’s study into adequacy of income in later life.

If we followed Australia, we would have a means-tested state pension which would only be paid to those with little or no income in later life; but this would complicate things still further. This chart shows how many state pension ages those in their fifties and sixties could have had; try means-testing that!

​​

We still have Baroness Rolfe’s suggestions on an increased state pension – ignored by the last Government and we have suggestions to come on future state pension ages from Dr Suzy Morrissey.

How much more complicated could this chart become?

The rate the state pension increases matters most to my 93 year old Mum

It is amazing that four out of five people swapping their pension pot for an annuity don’t buy and increase to the lifetime income they buy

Though we seem obsessed by the rate of increase of our state pension, we are still four times as likely to buy a pension with no increase in payments than one linked to a formula for increasing!

​​

Sourced by Retirement Line https://www.retirementline.co.uk/blog/analysing-the-fca-annuity-data-for-2024-2025/

This brings me to my central question.

” Does the state pension age matter more than future  increases?”

I think that people’s attitude towards pensions in general but the state pension in particular is based on immediate need. Annuities, like the state pension, are judged by the income they pay at the outset.  People engage with the payment today, not future increases in the state pension.

The most important thing to most people is when it comes into payment. You don’t have to go back far in time to remember WASPI and the delays women suffered when their expectation of a state pension age was 60. The Government’s lesson for today is to keep people informed of why changes are happening and manage expectations.

As far as increases to state pensions, I suspect that people lock in to the current rate of state pension and imagine it as what they get, increases are a bonus because people expect pensions (like annuities) to be level. They like the certainty of the state pension.

For that reason, Torsten Bell is hinting that he will drop the one of  the triple locks – reducing pension increases. Meanwhile he hints he won’t support the most drastic proposed increases in the state pension age.

Of course there are exceptions, my Mum (now a pensioner for 34 years) is very interested in pension increases! But pensioners, despite being good at voting, are not as productive to the exchequer as we workers !

If the Government is constrained,  then it is better to freeze state pension ages than to continue triple-locked state pension increases.

 

Posted in pensions | Tagged , , , | 1 Comment

Could the triple lock be scrapped… and should it be?

Posted on March 22, 2026 by henry tapper

Industry veteran HENRY TAPPER gives his verdict

By HENRY TAPPER

Henry Tapper is a retirement industry veteran, chairman of pension research firm AgeWage and president of Pensions Mutual.

The Pensions Minister Torsten Bell is hinting that he will drop one of the elements of the triple lock, potentially reducing future pension increases.

Meanwhile, he also hints he won’t support the most drastic proposed increases in the state pension age.

If the Government is constrained financially and needs to choose, then I’m not hinting – I am going to say it outright.

It is fairer to freeze state pension ages than to continue triple-locked state pension increases.

Henry Tapper:  Not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall

Henry Tapper:  Not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall

Under the triple lock, the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent, and the Government has promised to stick to this for the rest of the current parliament.

The state pension age is going to start rising from next month from 66 to 67, in a gradual process that will take place over the next two years.

The timing of the next rise to 68 is officially up for review again, and after that what happens is unknown.

But the Institute for Fiscal Studies and other think tanks and experts are warning that without reform of the state pension triple lock, the retirement age will have to go up faster.

The IFS says to 74 by 2069, affecting people now in their 30s and younger, but others think the age jump and rate of increase might need to be even more radical.

What matters most to Brits about the state pension – the age they get it or the annual increase?

The state pension age matters most to those yet to get it, like me. The rate the state pension increases matters more to my 93-year-old Mum.

I worked most of my life expecting to receive my state pension when I’d be 65. I’d be a pensioner in eight months’ time had that conjecture held true.

But my state pension age increased to 66 and then a 2020 review raised it to 67 so I have two years to wait.

I can put up with it. I’m still working and can balance not being a pensioner against having probably another 25 years to live.

I live in a posh place. But not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall over the past few years.

Many people in poorer areas than mine also do not receive the full state pension, often because they did not work for long enough in the UK.

Why should I expect the same pension when I’ll receive it for a longer period and have had the chance to save all my life into personal and company pensions? This opportunity has meant I’m doing well.

Shouldn’t what the state pays out be based on people’s means and how adequate their pension is? Should I have the same state pension age as someone my age in a less well-off part of the UK?

These are the kind of questions the pension expert Baroness Jeannie Drake has to consider as she conducts the first part of the Government-sponsored Pensions Commission study into adequacy of income in later life.

If we followed Australia, we would have a means-tested state pension which would only be paid to those with little or no income in later life, but this would complicate things still further.

The chart below shows how many state pension ages those in their 50s and 60s MIGHT have had under the various independent reviews Governments have asked experts to conduct in recent years – try means-testing that!

The Government is required by law to review the state pension age every six years, so it has ordered two more reports which will look at when to introduce an increase to 68. How much more complicated could this chart become?

Freezing state pension age versus keeping triple lock

Older people understand the value of state pension increases but I’m not sure those just reaching retirement do.

It is amazing that four out of five people swapping their pension pot for an annuity as they retire don’t include any increase with the lifetime income they buy.

Though we seem obsessed by the rate of increase of our state pension, we are still four times as likely to buy a pension with no increase in payment than one linked to a formula for increasing!

This brings me to the Pensions Minister’s dilemma. Does the state pension age matter more than future increases? (That’s my phrasing of the questions he discussed in a recent debate in parliament.)

I think that people’s attitude towards pensions in general but the state pension in particular is based on immediate need.

Annuities, like the state pension, are judged by the income they pay at the outset. People engage with the payment today, not increases far in the future.

However, the most important thing to most people regarding the state pension is when it comes into payment.

You just need to think about the Waspi campaign, which was launched due to the delays women suffered when their expectation of a state pension age was 60, and is still ongoing.

The most important thing to most people regarding the state pension is when it comes into payment

The lesson the Government should learn from that is to keep people informed of why state pension changes are happening and manage expectations.

As far as increases to state pension payments go, I suspect that people lock in to the current rate of state pension – the full rate rises to £241.30 a week next month – and imagine it as what they will get.

Increases are a bonus because people expect pensions (like annuities) to be level. They like the certainty of the state pension.

Of course there are exceptions. My Mum, now a pensioner for nearly 34 years, is very interested in pension increases.

But pensioners, despite being good at voting, are not as productive to the Government as we workers.

If we must choose, it is fairer to freeze the state pension age than to keep the triple lock.

Posted in pensions | 3 Comments

The Death of the British Steel Pension Scheme – an obituary from David Boyd.

Posted on March 22, 2026 by henry tapper

David Boyd is a member of the NFOP British Steel Branch,  The National Federation of Occupational Pensioners has over 30,000 members and provides  a voice for people in retirement.

This is his obituary of his pension,  being a pensioner of the British Steel Pension Scheme. I publish it on his behalf

The Death of the British Steel Pension Scheme

The death has been confirmed of the British Steel Pension Scheme ( called hereinafter ‘Pen’) after a very long and painful illness involving many major surgical interventions.

Pen was born in Whitehall, London on 7 July 1969, the offspring of the union of his parents The British Steel Corporation, in 1967. He grew rapidly into a strapping adult, at his peak effectively managing assets of around £15 billion for well over 125,000 steel industry members and winning many national awards for his prowess.

Unfortunately, Pen’s parents hit hard times and, in 1988, they themselves were formally fully-disowned by the Government of the day and floated as a commercial limited company. Pen’s parents’ fortunes continued severely to decline, and in 1999 they merged with a Dutch steelmaker to form the Corus Group but this failed to halt the decline process resulting in the troubled Corus being taken over by the Indian-based industrial conglomerate Tata in 2007.

This acquisition proved a financial disaster for Tata too, who in March 2016 announced that Tata Steel UK had lost £2 billion in the preceding five years and that the company faced insolvency. Tata were then still responsible for Pen but applied to the Pensions Regulator to decouple their company from Pen on the grounds that continued responsibility for Pen in his present form would inevitably lead to Tata UK’s insolvency.

This led to Pen undergoing major amputations with the stated aim of ensuring his future survival without any support from Tata UK. The most significant of these was that pensioners with pensions earned before 1997 were barred from all future routine pension increases. Inflation-proofing increases generally were also significantly cut-down. Very many pensioners reluctantly voted for this surgery to happen as the only solution presented to them to keep Pen alive in something at least close to his present form.

The surgery took place but then Pen’s guardians stated their intention to kill Pen off provided his financial assets could be grown sufficiently to interest an insurance company in taking over his legacy in return for securing pensioner benefits (as revised) and creaming-off the almost-certain and considerable future financial surpluses  This they have achieved, and they put Pen to death on 31 March 2026. They have chosen to issue no obituary nor any celebration of Pen’s rather illustrious and notable life, so this attempts in some way to rectify that omission.

The outcome of all this is that former workers many of whom have spent a lifetime in often-arduous and dangerous work cease in any meaningful way to be British Steel Pensioners and to be members of a pension scheme that was run for their mutual financial benefit. Rather, they become merely a liability on the books of a vast insurance company.  Most cease to have any effective involvement either in the payment of their pensions or the wider community of pensioners.

To the author of this at least, that’s indeed a great big shame which has only benefited Tata Steel and the insurance company.

[end of obituary and comment by David Boyd]

Do the pensioners know what else was discussed?

I have asked David if he was aware as a pensioner of the choices that were looked at by the Trustees and by the sponsor.

Over the last few months, we have been fighting for employers , trustees and members to see an actuarial document called the TAS300. This gives the figures for the various alternatives available for the scheme
These include:
  • Buy in and buy out with an insurer
  • Transfer of sponsor (as Stagecoach recently did with its scheme)
  • Transfer to a superfund
  • Continuing with the existing sponsor
I’m not sure if you have ever heard of this document, let alone seen your scheme’s or been privy to the decision made and why alternatives were rejected (or perhaps not considered)

This is David Boyd’s response

No, wasn’t at all aware of the actuarial document you mention – and coincidentally one of my NFOP British Steel Branch colleagues mentioned only last evening the apparent lack of other options for the Scheme’s future.

Posted in pensions | Tagged , , , | 5 Comments

Pension Mandation and “the irrelevance of the Lords as a talking shop”

Posted on March 22, 2026 by henry tapper

Guy Opperman may not be a part of the Labour Government but he understands how governments work and why the protest from those arguing for fiduciary freedom will not be granted the amendment the House of Lords has sent downstairs

The following statement is from a friend who like Guy Opperman , knows Government well.

Guy Opperman is spot on right on this. Government will do what it wants.  They may or may not make some tweaks.

The triumphalism of the fiduciary duty/trustee crowd doesn’t matter one jot.   It could easily be counterproductive. Greater scrutiny of the merits and otherwise of fiduciary duty for starters. Or just skip that.

Nationalise AE making it what it is – funded social security. Freeing up all pension savings on top of that, but using the changes to cut tax and NI relief.

Well there’s a thought. I didn’t think the Pensions Minister held the “fiduciary duty/trustee crowd” in high regard at the Pensions UK conference earlier this month.

There was a lot of teeth-grinding following Guy Opperman’s realistic post. I include two examples. The first from Graham is just petulance and included as it represents the frustration who breathe the thin air at the fiduciary summit….

Tom’ s post suggests that the Labour Government may lose the whole Pension Schemes Bill in the ping pong of this amendment between Upper and Lower house of parliament.

I am surprised if this will happen, this Government has a big majority and the Pension Schemes Bill is one that is generally popular on all sides (putting “mandation” aside).

Guy Opperman offers little solace to Tom and to his private correspondents

To show that I’m not the only fan of Torsten and his bill and his support from the Chancellor…

This is a message from one of my friends

This is not a good time for industry special pleading, with the wider demographically driven outlook over the foreseeable next few decades.

It shows many things. The irrelevance of the Lords other than as a talking shop, often interesting, but essentially a retirement home. Where mysteriously people get paid to be residents.

The real problem is however not that they are ineffectual and waste resources but that we need a second chamber that does have the ability to have some effect.

The ABI, Pensions UK, IFS , PMI and endless pension professionals (including good friends) stand against mandation.  I’m not interested in this high-minded principle. I’m interested in getting things done – something we do very little of.

 

Posted in pensions | Tagged , , , , , , , | 2 Comments

DC offers flexible income while CDC provides deferred pay (the genius of Derek Scott)

Posted on March 22, 2026 by henry tapper

Here’s my friendly Scottish Accountant and Pension Trustee – Derek Scott, reminding me that for many people, the ideas of salary and pensions as “deferred pay” are old fashioned

I think, since Barber vs GRE in 1990, you’ll find that occupational retirement benefits are already considered “deferred pay”.

“Salary” now seems a rather quaint idea, a fixed, regular payment (typically monthly) independent of hours worked, allegedly offering more stability and salary-related benefits.

It’s not just employers in the “gig economy” who these days prefer short-term contracts and variable pay based on an hourly or daily rate, perhaps allowing for minimum hours and/or an element of overtime pay.

State pension offers a minimum (but inadequate) level of “income” in retirement, while one of the other features of modern-day retirement is that cash requirements may be lumpier and irregular and unpredictable.

This in turn may mean pot decumulation strategies such as flexi-access drawdown (some of which is still tax free) alongside optional insurance products very much still have their place.

This is very modern thinking from someone who could be thought a veteran! I think he’s right for many people which is why the ideas of DB and CDC pension don’t resonate with many people of the kind that Derek describes.

Which is why it is important that employer’s decide whether they want the old style pension (as public sector workers get) , CDC pensions – which mimic old style pensions but deliver as the market lets them or whether employees are encouraged to put money away for a later life that they can finance as they choose.

It’s nearly a year since I went to visit Derek in Fife and realised then that he thinks more deeply than almost anyone I know about what people want in retirement. Derek was Chair of Trustees of bus company Stagecoach and Railpen, the railway workers pension scheme. Here are workforces that I see at work a lot, men and women on busses and trains , driving me to schedules that they can often choose. There is increasing flexibility but I’d still consider they see themselves as salaried and their unions, Unite and RMT certainly value certainty of what they call the “deferred pay” of a pension.

There is a tremendous debate going on within unions on this subject and I hope a similar debate in the HR and Reward teams of employers (with pensions being discussed as a benefit not just a liability).

What seems most important is that we establish what options people are given to opt out of “deferred pay” pension arrangements and to what extent, a flex arrangement is promoted over a CDC. I think it could be argued that CDC is not appropriate for all companies but I think, before it is rejected, it needs to be understood, valued and only rejected if the price of freedom is considered worth paying.

We have seen a move in DB consulting to establish TAS300 as a way for an employer and trustees to consider whether to buy-out a pension with a bulk annuity or explore other options (which Stagecoach did with Aberdeen). There are alternatives such as superfunds for DB pension schemes but so far , little of the variety have been chosen to accommodate DB promises.

We should have a similar way to assess DC in its purest form as pension freedom, its halfway house of flex and fix and its deferred pay option, UMES and Retirement CDC.

This may sound hard, but relative to the choices of DB it is relatively easy to make choices based on an understanding of the behaviour and needs of employees. Even if employees appear to be contractors, most who work over time get rights as workers under auto-enrolment so it’s hard for companies to walk away from decisions that they will need to take.

The phrase “deferred pay” is the right one for DB and CDC while  ” flexible income” is the phrase I’d use of DC. They suit different workforces, what kind of workforce is yours?

If we can banish the minute detail of how flex and fix and CDC might work, then we can have a sensible discussion around retirement income as deferred pay or as flexible income.

Thanks Derrick for helping me to think this through. Thanks to Terry Pullinger for making it simple in my head!

CDC pensions such as that provided by Pensions Mutual, should focus on employers whose employees appreciate deferred pay while workplace master trusts may offer a choice to employers of deferred pay or flexible income.

This seems entirely sensible for unions, employers , consultants and providers as a discussion framework.

Posted in pensions | Tagged , , | 1 Comment

What matters more to us – our pension on day one or how it increases?

Posted on March 22, 2026 by henry tapper

Increasing rates of a pensions at inflation (CPI) is half the liability of a pension promise says my friend and colleague Chris Bunford.

Another actuary, Andy Young makes the point that we do more than promise inflation protection with the triple lock

It is the increases on the state pension that make it so expensive. This is a report of our Pension Minister speaking in parliament (pictured above)

Andy Young used to advise pensions ministers on the cost of increases, he knows what he is talking about and Torsten Bell has for many years been warning us that we undervalue the triple lock on our pension increases.

Torsten Bell discussing state pensions in parliament recently

All the evidence is stacked in favour of us valuing the kind of increases we get from the state pension, it is what most of us get from occupational DB plans and it is what CDC will give (and the quotes for retirement income from your DC plans won’t show when you go on the dashboard).

There are of course those who suffer the outrageous unfairness of getting no increases on their occupational pension (the pre 97 pensioners) and they lose over time more than the WASPI women lose  from State Pension Age deferment. The WASPI and Pre 97 frozen pension campaigns are the front and back of the same coin. But I wonder which we worry about more. I think I find an answer in our behaviour. Those people who chose to buy an annuity with their pot ( a number increasing lately) do not generally choose to buy an increasing annuity. It’s still not 20% of those who buy annuities that buy any increase.

Graph from Retirement Line – thank you Mark Ormston

That’s because, we value a higher income today rather than an increasing income tomorrow.

It was an act of supreme responsibility that the Government decided to increase the state pension by the higher of inflation, wage increases or 2.5% .  It was a huge shift of support to those most needing the state pension from general taxation.

What Andy Young talks about in his Linked in post is that the increases used to be on both state pension and SERPS and when we lost SERPS we got DC pots from Auto-enrolled pension saving systems that lead to anything but inflation linked pensions!

If you are Torsten Bell you see from state funded pensions (including the fully inflation linked public sector occupational pensions) which will pay an increasing pension. On the other side of pension planning he sees private sector “pensions” which are just pots of money. Those pots are being exchanged by a small number of us for annuities – for the most part level annuities.

The pots will appear on our dashboards as what the pots can buy as level annuities and even then the income will be shockingly low to many looking at their pots that way. The pension schemes bill/act will mean that the majority of us will get our pots converted by default into a flex then fixed annuity or into a retirement CDC.  If you are Torsten, you have to think hard about the amount of increases built into the retirement income offered for life.

So just as the Pensions Minister that we may not have triple lock increases on our state pension , he has to think about how to get some kind of increases into default retirement income into pots – converted into lifetime retirement income.

My question to myself and to you readers is whether we really think about our future retirement income as “when we get it” or “how we get it”. Most of  workplace pension DC pot  savers have enough to retire for a bit from 55 on what we’ve saved but not enough to retire for our lives. Those who do not cut and run early (and the FCA say a lot do) will keep  money rolling up until the default cuts in and then the defaulters will get paid what the Government tells DC pensions they must give.

The default retirement income under flex and fix has been offered us by Nest (an increasing annuity from 85 and an increasing income from drawdown before then). Retirement CDC will be something like that, without the insurance and the freedom of Nest’s flex drawdown pot. Nest is promising increasese on its default retirement income

Whatever the choice of DC pension default , the impact of any mandated pension increases will be to  depress the default income we get from what we see on our  pensions dashboard. The dashboard will be quoting the level annuity for projections.

This is the second of the Torsten Bell’s problem with increases. Will he be the Pension Minister that makes increases on retirement income part of the default? Will Retirement CDC and “flex and fix” be the two choices to consolidated DC schemes and will people accept that the triple lock is too great an increase (just as annuity purchase was and is no increase for most of us).

In the long term, CPI increases may be adopted for state, public and private pensions (they’re already paid by private DB schemes).  In  the next five years , we’ll have  more discussion about the cost of increase promises to our DC retirement income.

Royal Mail’s CDC scheme promises CPI +1%. Is that 1% – private pension’s triple lock?

Posted in pensions | Tagged , , | 1 Comment

What’s wrong with life assurance paying your tax?

Posted on March 22, 2026 by henry tapper

Yesterday I published a simple article about employers being able to pay for assurance that pays if you die when employed (in service). You can read it from this link

Some people need to take out assurance for themselves. Maybe they want it to stay in place longer than they want or can stay in service.

Whole-of-life cases pay out when the policyholder dies and are often used to cover a future tax liability.

Mary McDougall and Emma Dunkley tell us..

The number processed by wealth manager Evelyn Partners rose by 66 per cent last year compared with 2025, while Royal London’s insurance arm sold 50 per cent more of the policies over the same period.

If you put the policy under the right kind of trust, it will pay out – outside your estate.

“The size of the sums assured has increased dramatically,” said Ian Dyall, head of estate planning at Evelyn Partners. “We are currently helping a number of clients with liabilities in excess of £10mn.”

Some of these assurances will have a big sum assured!

If you want a tax free pay out independent of your employer you can’t individually get tax relief on your policy, If you want your personal pension pot to pay your bill you get tax relief on the way in (and investment growth) but your estate will have to pay inheritance tax on its pay-out.

Put like this, it looks like the people who are winning out of all this are insurance companies. They write the whole of life policies (and some term assurance to cover the period till the gift tax ratchet wears out). They write a lot of DC pension business and of course they underwrite death in service assurance.

“Inheritance tax planning has absolutely exploded,” said Barry O’Dwyer, chief executive of Royal London, adding that “by far” the easiest way to plan for inheritance tax was to buy life insurance that pays out on death.

While there are a few super-rich people who leave a £10m IHT bill behind them, the amounts of people who have not spent their pension pot is higher

The government estimates its proposals will bring about 1.5 per cent more estates within the scope of death duties in 2027-28, on top of the 4 per cent that already exceed the £325,000 nil-rate band, which can rise to £500,000 where a property is passed on. The move is forecast to raise £1.5bn a year for the Treasury by 2030.

Higher, but like most of the tweaks to pension tax, not that big. Like the row about “mandation”, this is more about principle than practice.

Perhaps the best thing that the rich should do is buy an annuity , invest in a CDC pension or exchange their pot for a public sector index-linked pension, if they are newly into service in the NHS, LGPS, Civil Service or (dare I say it) , the Pensions Regulator.

Your pension could pay your life insurance contributions each month. Better still your employer’s death in service benefit, could mean your estate could makes a lot out of your passing with the whole of life and death in service giving your beneficiaries a bonanza.

“Life insurance has exploded!”

Posted in pensions | 2 Comments

Inheritance tax and Death in Service Benefits

Posted on March 21, 2026 by henry tapper

I tend to trust material coming from First Actuarial. It is simple and clear.

It’s good to see a note on social media on a topic that created uncertainty for millions of workers whose dependents will get a lump sum without threat of tax if they die while employed by a company that offers “death in service.

The value of death in service payments is not recognised till a payment is paid out and then it is an unexpected benefit to a family. It was not right that the value of that benefit could become part of a tricky discussion with the revenue over whether tax might be due.

Many people get this defined benefit but are not , nor ever were accruing pension sponsored by the employer offering them life insurance.  Many save into DC arrangements and if they die will have a pot that may trigger a pot. Those building up a pension in a DB or CDC scheme that pays a pension (to a spouse or partner) should not see that pension become part of the estate assessed for inheritance tax .

There is of course a taxation problem for the well off saving into a DC pot but it may be that moving to CDC assuages that worry (so long as the CDC pays a dependent’s pension).

For First Actuarial and advisers and administrators, the situation is easier too.

I like the sentiment from Lee French and from First Actuarial. It is important that we think of pensions as protection for those who live and life assurance as protection for those who live on when  the earner has departed.

 

Posted in pensions | Tagged , , , , , | 6 Comments

Should we have to turn pots into a pension? Sharp minds struggle with Bill Sharpe’s problem!

Posted on March 21, 2026 by henry tapper

For the past 10 years I have struggled with a pension pot that I cannot turn into a pension . I do not want an annuity, it is not a good deal.

I spent two years working with Pension Superfund to set up a Pension Superhaven , developing a pension scheme where folk like me could convert my pot into an occupational pension. Pension SuperHaven was a kind of pension superfund for  retail customers like me wanting a pension not a pot. We failed, it failed and customers like me still have no pension but just pots!

Here is L&G on the subject.

Building simpler retirement options with CDC

It simply shouldn’t have happened:-  millions of us finding ourselves at retirement with a pot not a pension.

L&G’s spokesperson is Jayesh Patel. Ironically, he finds his article beside the most popular article on Corporate Adviser! My argument  is that we should never have had pension pots in the first place!

Nice to see John Greenwood’s Pension Mutual report most popular on the Corporate Adviser site

The familiar answer to inadequacy is for us to save more but isn’t there another way?

The insurer’s answer is for us to better fund our pots better, “addressing under saving for retirement” is the expensive way but it does not resolve the problem.

The Government are saying that swapping pots for pensions using a whole of life CDC pension could improve the pension people get at retirement by up to 60%. Not only does that help people address under-saving (making the bar lower) but it addresses Jayesh’s problem at retirement.

Doesn’t the pot to pension problem needs to be resolved before we get to retirement?

I could not resolve the “pot to pension” problem with Pension Superhaven. It’s not going to be easy for DC schemes to give members pensions at retirement.  Jay explains how hard it will be for DC providers to get people like me to choose to swap  pots for something else.

Retirement is extraordinarily complex for members. At the same time as navigating profound changes in their personal lives, they must also manage a myriad of financial decisions: where to invest, when to take income or cash, how much to withdraw, how the state pension fits in, and how to avoid unintended consequences, such as triggering higher tax rates or losing entitlement to state benefits.

It’s no surprise that Nobel Prize–winning economist Professor William F. Sharpe described the challenge of turning a pot of money into retirement income as “the nastiest, hardest problem in finance”.  This is why there is demand for simpler income options at retirement.

There is another way than trying to turn pot to retirement income

Muntazir (Monty Hadidi) is head of Pensions at First Bus  head of  UK Pensions Strategy, Governance and Member Engagement.  He is quoted in this IPE article as staying open minded

His problem is that his large workforce are expecting pensions but getting pots and that is causing them a problem. The view he has is that CDC does not give people headaches with “pension pots”. For him, CDC pensions are accumulated over lifetime and are what people engage with.  He hints that in future that may be the way for people to swap pay deductions not for pots but pension!

Of course, cutting the individual pot out of the equation is difficult for commercial DC master trusts . It means unwinding 40 years of relentless pot-building  into pensions. That is the situation we have now and Monty’s asking for the UK to “stay open minded” to CDC so another generation doesn’t find itself with the problem I and my generation has!

I suspect it’s not just  Monty Hadidi  and Jayesh Patel who are waking up to Bill Sharpe’s “greatest problem”!

Monty
Jay

 

Posted in pensions | Tagged , , , , | 4 Comments