“Tapper launches mutual CDC provider” – Corporate Adviser

Posted on March 17, 2026 by henry tapper

Published by John Greenwood March 16, 2026  Original on this link

Standing up for the right kind of CDC.

A new multi-employer collective DC (CDC) provider has been established by Henry Tapper, chair of AgeWage and head of Pension PlayPen, and Goddard Perry Actuarial senior actuarial consultant Chris Bunford.

Called Pensions Mutual, the body, which has been registered with the FCA as a co-operative society, will operate on a not-for-profit basis, and plans to launch within a year. It plans to be in a position to approach the Pensions Regulator for authorisation by July.

The costs of the entity will be paid by charges on the first group of employers in the region of 0.5 per cent to 0.6 per cent, although it will operate dynamic pricing dependent on market returns and longevity of members and their partners.

The plan aims to deliver inflation-linked pensions paying up to 60 per cent more than a guaranteed annuity.

Pensions Mutual says its CDC arrangement will offer more stable and predictable income than income drawdown offerings, and will enable a more efficient investment strategy than current drawdown or annuity models by facilitating a 100 per cent allocation to returns-seeking assets up to retirement age – tapering this element down to zero by age 85.

The Pensions Mutual CDC scheme will convert every contribution received into an amount of pension with initially targeted CPI annual increases using unisex fair value actuarial factors. Each tranche of pension will be visible to members so that they can see how their pension income is growing.

Where employers switch existing DC arrangements to the scheme, transfer of existing pots will be at the request of members. Pensions Mutual says it sees a transfer to CDC from DC being a three-year project.

The provider says it has received significant interest from employers and unions, which it says support its mutual structure.

Tapper says:

“The Pensions Regulator authorises the first unconnected multi-employer CDC schemes and we have not yet seen the final, adjusted CDC code. The door for authorisation opens on August 3rd and TPR has six months to say yes or no!

“We know that two organisations were making ready to launch such a CDC scheme – TPT and the Church of England—and now there are three. The third is a mutual—the Pensions Mutual—and it came into being at the start of March. Unlike the others it is dedicated solely to being the proprietor of a CDC for employers who want their pensions run as collective pensions with defined contributions. We are a CDC pension proprietor, starting afresh.

“The boards of the mutual and of the pension scheme are being established. We will announce our executive teams and also announce a board of trustees.

“Like others we will need to show ourselves competent and solvent, have a business plan, and have employers ready to work with us.

“So why do we believe we should become one of the few CDC schemes likely to be available to employers from the beginning of 2027?

“We think the answer lies in our title ‘Pensions Mutual. You become a mutual by registering with the FCA and agreeing to rules that ensure those who join the mutual benefit from it. We intend to distribute a significant proportion of the profits made by the CDC Scheme to the participating employers, rather like farmers who get paid by a co-operative dairy for the milk they bring to it over the year.”

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

Why the Government must have back-stop control of pension investment

Posted on March 17, 2026 by henry tapper

Faceless markets

There is a general feeling that UK pension funds should be investing where they want. I agree that they should, but “how they want” is another matter.

Right now there is a trend towards investing in American software, notoriously the “magnificent seven” but also in the private sector a large amount of software holdings.

While software companies have been identified, it could equally apply to other private equity companies where valuations originally made in a low interest rate environment cannot now be supported. The interest rate effect on valuations was more pronounced in the UK than in the US.

It could be argued that the UK Government policy effectively encouraging pension schemes to purchase overvalued assets. But it could be argued that the way the dollar has moved against the pound has worked against American stocks. These are arguments about what markets to be in.

I wasn’t aware of anyone talking about this in Edinburgh. Instead we had silly and facetious political squabbles about mandation. I want to understand markets but I want to feel protected by regulation from markets that go wrong.

Markets going wrong beyond our control.

Those old enough in the Edinburgh room will remember that UK pension funds invested in the UK as a matter of course in the last century.

One of the reasons for that was that we had trust in our market- making and through the UK stock exchanges. How far we have moved from UK regulation of the assets of UK pensions can be assessed through this article in “Investing.com“

 Apollo Global Management executive John Zito told UBS clients last month that private equity firms are broadly misstating the value of their software holdings, warning that lenders could face substantial losses in the sector.

Zito, who serves as co-president of Apollo’s asset management division and head of credit, said he believes private equity marks are incorrect as shares of comparable public tech companies have declined. His comments were first published by the Wall Street Journal.

The remarks come as investors have sold shares of public software companies on concerns that new tools from Anthropic and OpenAI could make existing software firms obsolete. This has raised questions about whether private credit lenders are holding outdated valuations of their software loans, triggering redemptions as investors seek to withdraw funds from private credit vehicles.

Zito’s comments at the UBS event focused on private equity valuations, but he noted that many companies acquired by the industry also obtained private credit loans. If the loans face difficulties, the equity positions are also affected, he said.

Zito identified software companies taken private between 2018 and 2022 as particularly exposed. He described many of these firms as lower quality than larger public competitors, referring to a period marked by high valuations and low interest rates.

The Apollo executive warned that private credit lenders and their backing investors could experience significant losses. He said lenders to a generic small-to-medium sized software firm could recover somewhere between 20 and 40 cents on the dollar if the companies are in the wrong place in terms of the new AI-led regime.

Apollo sought to distance itself from potential software sector losses, telling analysts that software companies represent less than 2% of the firm’s assets under management. The company said it has zero exposure to private equity stakes in software firms.

It should be noted that an increasing amount of the pension funds that we relied on are pension funds no more. Instead they are invested by American private equity funds, we know not where. We trust the American regulators and the PRA are showing increasing concern that no one understands the market.

I have come in for a lot of stick the past few days for saying that mandation is a means for our Government to intervene in UK pension investment. The entire world apart from me, Torsten Bell and Rachel Reeves are against mandation.

It is not the ABI , Pensions UK or the Government’s various “oppositions” , to take charge of how and where our pension funds are invested. In the end it is the tax-payer who elects our Government and our Government, working through the Treasury and the BOE, the PFA and then the FCA who control flows of capital.

We cannot pretend that the fiduciary responsibility of Trustees overrides the responsibility of Government to keep Britain in good shape.  Patriotism should remain upper most in our investing and that is measured by our deep trust in our Government’s regulators to do the right thing.

Posted in pensions | Tagged , , | 2 Comments

A CDC pension starting afresh

Posted on March 17, 2026 by henry tapper

In a recent podcast LCP’s Sam Cobley asks the question: “How many whole-of-life CDC pensions will we get this year?”

No one will know that until early 2027. The Pensions Regulator authorises the first unconnected multi-employer CDC schemes and we have not yet seen the final, adjusted CDC code. The door for authorisation opens on August 3rd and TPR has six months to say yes or no!

What we do know is that two organisations were making ready to launch such a CDC scheme – TPT and the Church of England—and now there are three. The third is a mutual—the Pensions Mutual—and it came into being at the start of March. Unlike the others it is dedicated solely to being the proprietor of a CDC for employers who want their pensions run as collective pensions with defined contributions. We are a CDC pension proprietor, starting afresh.

The boards of the Mutual and of the Pension Scheme are being established. We will announce our executive teams and also announce a board of trustees.

Like others we will need to show ourselves competent and solvent, have a business plan, and have employers ready to work with us.

So why do we believe we should become one of the few CDC schemes likely to be available to employers from the beginning of 2027?

Well, we think the answer lies in our title “Pensions Mutual.” You become a Mutual by registering with the FCA and agreeing to rules that ensure those who join the Mutual benefit from it. We intend to distribute a significant proportion of the profits made by the CDC Scheme to the participating employers, rather like farmers who get paid by a co-operative dairy for the milk they bring to it over the year.

A transparent business model for the Mutual will be matched by the Scheme which will work from an income fixed as a percentage of assets managed. This will be decided by the first group of employers; it is likely to be between 0.5% and 0.6%. It may be odd to put matters such as charges out for discussion but like our selected trustees and our strategy of turning contributions into pension we will listen to those who work with us.

Chris Bunford, our actuary, has made it clear that we will operate dynamic pricing – where this conversion of cash into pension will be influenced over time by the market returns achieved by investments and by the length of time our members and their spouses live. We see “fairness” as our primary actuarial driver.

Similarly, the management of our money will be influenced by our employers; some of whom will be experienced and wish to input while the majority will rely on the trustees and our CIO. It may well be that some employers wish to have their employees in their own section and we will be open to such discussions.  There are advantages to sharing and sometimes there need to be strategies that meet the needs of an employer and staff.

Finally, but most importantly, we cannot think of any stakeholder as more important in a mutual than its members each of whom must be treated with the same fairness and offered genuine value for their money. Nowadays, offering an app to give information is not an option; it is an absolute requirement. I can think of no financial service I am a part of that does not give me access to information and to transactions on my phone. We want members to know not just how they are doing but how they are doing compared with other options.

The promotion of Pension Mutual’s CDC Scheme to employers will also be digital, we expect you are reading this on a screen. We expect it will be supported by unions whom we consider keen advocates of both CDC and mutuality.

Our pitch to employers will be simple: “better pensions at no extra cost”, though we will advocate greater contributions when they can be afforded. We consider transfers in of pension pots important but we also consider fair CETVs critical to confidence among members. Our pitch to members will be identical to that to employers, we intend members to get inflation linked pensions at up to 60% enhanced levels compared to a guaranteed annuity.

Not everyone can afford the flexibility of drawdown or a costly annuity.  CDC is a better way for ordinary people to get “deferred pay”. We want to make retirement affordable for many more of us.

Posted in pensions | Tagged , , | Leave a comment

“Rising interest rates bring prolonged downturn to the buyout industry”

Posted on March 16, 2026 by henry tapper

We need to say this again and again. The money that insurers swap in return for promises to pay annuities (replicating pensions) is invested by those insurers for profit.

But as Mary McDougall and Alexandra Heal explain here, the investment of money in the private markets does not  always make for profit and what if it led to trouble for these insurers?

They’re talking here about investment in private equity but the story in private credit has been even worse. OTPP, La Caisse and Omers are massive DB plans and not insurers buying out UK DB insurers, but read on…

A number of Canada’s biggest investors lost money on their private equity holdings last year as a downturn in the buyout sector continued to weigh on returns at some of the world’s largest retirement funds.

And does this sound familiar

OTPP’s PE portfolio dropped in value from C$60.4bn to C$50.8bn last year, partly driven by full or partial sales of its investments in insurance brokerage BroadStreet Partners

Sounds familiar?

We are experts in acquisitions, we act as a capital partner to agencies with an acquisition growth strategy and we offer our agency partners access to a network of best-in-class agency leaders, risk management professionals and insurance solutions.

Investment in the insurance buy-out market has been bad news for these Canadian Pension Schemes, but investing in listed markets has been better news

 

Overall returns across the pension companies were boosted by buoyant stock markets last year. OTPP’s total portfolio net return was 6.7 per cent, compared with 6 per cent for Omers and 9.3 per cent for La Caisse.

An increasing number of once British insurance companies are now owned by American and Canadian private finance companies investing the money that once backed our pensions into American private credit.

“Buy-out” in the American insurance market has not been good for Canadian pension funds and I fear it won’t be much good for UK pension schemes and pensioners too.

The not so diverse management team of aforementioned Broadstreet Partners

 

 

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

IHT on Pensions…tomorrow (Tuesday) 10.30 – entry here

Posted on March 16, 2026 by henry tapper
avatar Steven Goddard
CEO
Pension Playpen

Coffee Morning – IHT on Pensions…REALLY!!! CPD included

Type – Teams Online

When – Tuesday 17th March at 10:30am

You are cordially invited to attend our next Coffee Morning. At this event we are delighted that Mark Plewes from WBR Group will be presenting his thoughts on the change in IHT for the Pensions landscape.

He will give us his thinking of an overview of where things sit with the current IHT proposals on unused pensions passing through parliament and any lingering concerns that there might still be around implementation and issues. He will also want to touch on how the potential complexity of the plans might impact outcomes for beneficiaries and whether there is presently a risk of wider detriment and scam activity in terms of the confusion that such a change will cause.

Background:

In December 2025 the Government published the Finance Bill containing provisions to bring pension scheme death benefits within the scope of inheritance tax from 6 April 2027.  We look at what has changed since the legislation was originally published in draft, and consider what action SIPP and SSAS providers need to be taking now.

Agenda

  • What to do now?
  • How will pension planning change?
  • Occupational vs SIPP/SSAS?
  • What are the alternatives?
  • Will a new government U Turn this decision?

TO REGISTER

Please add to your calendar and click HERE on the day 

Mark Plewes is Head of Technical at WBR Group and recently appeared by invitation at the House of Lords to inform the  pensions finance bill debate.

Mark has been at WBR Group for over 3 years and prior to this role he was Senior Technical Specialist at Rowanmoor.

This should be a lively session with emotions running high!!.

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

Why does CDC pensions make sense for the whole of our lives?

Posted on March 16, 2026 by henry tapper

We save for many things in our twenties. We save for a deposit on a house or to get married and have a family. We may have to start paying off student debt and big rent and council tax payments, we will almost certainly be paying income tax and national insurance. To save for our retirement may seem a low priority but we do so , because of auto-enrolment into a workplace pension from 22 and very few of us opt out. Reluctantly we recognise it is the right thing to do.

We buy our house get married and start a family in our thirties and before we know it we are in our forties and more than half way to 55 when that money we put away in our pensions can come back to us. In our forties and fifties, we start looking at out pot (or pots) and from next year (we hope) we’ll be able to see them on a dashboard telling us how they, along with the state pension, will help us wind down and eventually retire.

By the time we get to our mid fifties we find that pot accessible and very tempting. Some of us blow the pot but most of us keep rolling it up. The pension dashboard will translate the pot into a pension and we can see if we can afford to retire on our deferred pay.

That’s how it is today but it may not be how it is in the future, not if we switch from saving in a pot to building up a pension. The reason that might be is that the Government , along with clever actuaries and researchers has worked out that the deferred pay you’ll get from saving for a CDC pension will be up to 60% more lucrative than paying yourself out of the pot.

That may sound like “magic beans” but it’s not. The power of investment in real things like equities, infrastructure and property is huge. It is why pension funds battle through and pay promises, it’s because they are regularly funded and have been fully invested. Nowadays these DB pensions are in an endgame and less invested but the baton is being passed to CDC pensions , run for employers to offer staff deferred pay as pension.

The key to it all is that CDC pension schemes are not invested for the short term but have an infinite investment horizon meaning they can invest where the biggest returns are. It’s why asset managers are excited by CDC and it’s why one leading consultancy (LCP) has recently stated that nearly three quarters of the improved pensions from “whole of life” pensions comes from long term investment. Here is what an actuary (Derek Benstead) explained the success first of DB and now CDC with

So long as CDCs do not closed, they stay in an investment sweet spot that means the CDC promises can be met and even exceeded. CDCs can take over from DB as sitting in the “sweet spot” with an “infinite time horizon”.

We don’t need to get 20 year olds to get excited, we just need them auto-enrolled into CDC. We can expect some in their thirties and more in their forties to get excited and by the time people are in their fifties and sixties we can expect those who’ve been in whole life CDC schemes, to be a lot more comfortable that retirement will be affordable than if they just have a pot- 60% more comfortable if “adequacy” is the measure!

Behind all this is collective investment, which is the future for pensions, just as it has been its past. The success of pensions is its investment in the kind of things its good to own for a long time! Because I want to have a shower of money that works for ever after!

Posted in pensions | Tagged , , , | 1 Comment

Can we AFFORD the flexibility of drawdown and the certainty of an insured annuity?

Posted on March 16, 2026 by henry tapper

 

Not everyone can afford the flexibility of drawdown or a costly annuity.  CDC is a better way for ordinary people to get “deferred pay”. We want to make retirement affordable for many more of us.

The freedom we were given in 2014 by George Osborne was from having to buy an annuity. The individual annuity is a luxury product for those who can exchange their pot of pension savings for certainty. My friend Mark Ormston rightly calls this a great time to buy an annuity if an annuity is right for you. For people who can afford to buy certainty, annuities provide it. The same can be said by the end game for private DB schemes who buy annuities in bulk.

But as means of providing deferred pay for the ordinary worker, an annuity cannot provide the income people are expecting and needing. This will be realisation people have when they see their pension pots expressed as “estimated retirement income” (ERI). This income will be based not on an income increasing by inflation but level (so falling behind inflation immediately). Even when the annuity is paid flat, with no increases, it will show the fall in pay people will get, even taking into account the state pension when they get to 67+.

As Hymans and Royal London have pointed out, we will on average find ourselves £12,000 pa down on the retirement we need in retirement. They call this the State Pension shortfall because you’d need to be paid your State Pension twice, to bridge the shortfall of your deferred pay in retirement.

That assumes we buy into the certainty of an annuity with the low average pots we have accumulated. It is only with the help of private and public DB pensions that many people can have the luxury of swapping their AVC pots, their legacy personal pension saving pots and their recently accumulated workplace pensions – for an annuity.

Those that have the means to swap pots for certainty will find great brokers like Retirement Line to help them do it, but they are not ordinary people, they are people who know what they are doing.

There will be a new kind of annuitant in years to come. Nest has used its enormous muscle to get a good deal for those who keep their money in Nest and survive to 85. They will be bought out of their pots and into an insurance arrangement underwritten by Rothesay. Between the point when they start drawing down on their pot (with the help of Nest) they will have the flexibility to spend their pot as they like but there is no certainty of the income they will get at 85 if they spend the pot as they like.

We have not seen the results of the work done by Nest for those taking their retirement guidance on the deferred pay they will recommend but my bet is that it will not delight most Nest savers. That’s because Nest will target a residual pot big enough when the savers makes 85 to keep paying deferred  inflation linked pay from an insured annuity.

Here is the sad but honest truth. We cannot have total flexibility, while having certainty unless we have enormous amounts of money. If we have a lot of retirement money we don’t need pensions and can use (until next year) our pension pot as a means for our successors to pay the inheritance tax bill we leave them if we die before 75. But that is not for those who Hymans and Royal London describe of a State Pension worth of income to make ends meet in retirement.

This brings me  to the alternative to buying an annuity when retiring or even on a “flex and fix” at 85. That alternative does not provide people with the flexibility of drawdown (what Nest will give you) but does give you up to 60% more pay than you would get from buying an annuity. That might and probably will not be enough to bridge the State Pension gap for many people but it will do something for them if they swap their pot(s) for retirement income. This is what will be coming our way in 2028 and will probably be up and running from some commercial master trusts. It is called Retirement CDC  – it’s a swap of pot for pension.

But for those who are saving for a retirement that’s not upon them today, then it will be possible for them to buy pension as they go along from a CDC whole of life pension scheme. This type of scheme has been a long time in the devising but it is now legislated for and from this summer, CDC pension scheme will start getting authorised.

These are the type of CDC schemes the Government reckon will pay up to 60% more than an equivalent annuity and for those who join such a plan, they will get better pension for their money over time. At a time when we struggle to save what we do into a pension pot, we may find the CDC answer a simple way of making our retirement more affordable.

Posted in pensions | Tagged , , , , , , | 3 Comments

Thoughts of accountants on the use of Pension Surpluses in DB

Posted on March 15, 2026 by henry tapper

Pensions Oldie is I think an accountant.  Here are his thoughts following my blog on employer strategy from Hymans Robertson

Pension Oldie

I agree that the webcast is an excellent review of the current position and the matters to be considered by all employers, who are the party that will ultimately determine the success or otherwise of the occupational pension system in the UK.

My own views with a 40+ year experience of occupational pension arrangements is that in 30 to 40 years time we will look back on DC pension arrangements as a failed experiment.

The reasons they will be regarded as having failed may still to be determined but I consider that they are likely to include the diversion of attention from the objective of providing retirement income instead viewing them as tax subsidised savings vehicles, distancing the employer from the pension outcomes of the employees past, present and future; but primarily through the extraction of profit by third parties dealing with all aspects of the administration, investment, and payment of pensions. The consequential question of where those profits are ending up and how far they contribute to the UK economy is likely to prove far more significant than any mandation of investment policy.

My own 40 year prediction from my past 40 years experience would be a return to favour of single company DB arrangements, possibly on a shared ambition basis.

In the meantime, employers should open their minds to all the alternatives available and perhaps as Hymans suggest take a watching brief while both the Government (perhaps through the Pensions Commission) and the industry opens up new opportunities. This is likely to be more significant to long term employer survival than seeking to maximise short gains from surplus refunds paid out as dividends or used for share buy-backs while enhancing past service benefits for previous employees beyond those required to protect the real value of their pensions.

Derek Scott is an accountant and responds to Pensions Oldie as one to another!\

In reply to Pensions Oldie

Agreed, PO, but we desperately need a change in present day accounting standards to give management more incentive to run on DB schemes or use DB surpluses to part fund DC or CDC.

Estimates of pensions deficits that arise from informal promises or expectations arguably fail the strict tests for a present obligation, reliable measurement, and “no realistic alternative” that are used to justify balance sheet recognition as a constructive obligation; in many cases they arguably better fit the definition of a contingent liability, warranting disclosure in the notes instead.

Conceptual arguments
• IAS 37, Provisions, Contingent Liabilities and Contingent Assets, requires a present obligation (legal or constructive) from a past event, with no realistic alternative but to settle, before recognising a provision. Where an employer can still change, cap or terminate a scheme or discretionary enhancements, and/or reasonable investment returns may be expected to settle liabilities and reverse a current value dip, there is arguably still a realistic alternative, so the obligation is contingent, not present.
• IAS 19, Employee Benefits, extends this perverse logic by bringing in constructive obligations from informal practices (for example, a history of benefit increases) into the estimated pension measurement. But whether those practices genuinely create an irrevocable commitment is judgemental; if employees’ expectations are not enforceable or could be changed without “unacceptable damage”, the obligation is conditional on future management intent, not a present obligation.

Measurement uncertainty
• Estimates of defined benefit deficits depend on long‑term actuarial assumptions (discount rates, pay growth, longevity, inflation) that can move the estimated liability materially with small changes. IAS 37 treats obligations as contingent (footnote-only) when the outflow cannot be measured with sufficient reliability.
• For many schemes, the “deficit” on IAS 19 differs dramatically from the funding basis actually driving contributions, because funding valuations use different discount rates and risk assumptions. Recognising a single headline deficit as if it were a firm obligation overstates precision; footnote disclosure better reflects the range and conditionality of possible outcomes.

Economic vs accounting obligation
• Companies can report an IAS 19 “surplus” yet still be required (by funding agreements or regulation) to make “deficit reduction/repair” contributions, showing that the recognised pension position may not track the economic burden. This weakens the case that the booked pension number is a faithful representation of a present obligation.
• Conversely, deficit estimates that rely on assumed future benefit improvements (treated as constructive obligations) may never materialise if business conditions change. In economic terms these are options or intentions, not liabilities; presenting them as contingent in the footnotes allows users to see the potential exposure without implying an unconditional obligation.

Faithful representation/true-and-fair-view and neutrality
• Constructive obligations for pensions rest heavily on management’s past practices and implied promises, which are inherently subjective and susceptible to bias. Recognising large balance sheet liabilities based on such soft evidence risks undermining neutrality and comparability of accounting.
• Footnote treatment as contingent liabilities would still require robust qualitative explanation of pension plan terms, funding policy, and sensitivities, but avoids embedding speculative amounts directly in equity and leverage ratios. This can produce a more faithful representation where the boundary between present and future obligations is especially blurry.

User understanding
• Analysts and creditors often already adjust reported pension numbers because they see gaps between accounting measures and economic risk; research shows markets previously “priced in” off‑balance‑sheet pension deficits when transparency was lower. This suggests that sophisticated users can work with footnote disclosures rather than relying on a single recognised figure.
• Treating pension deficits related to constructive obligations as contingent note items lets users model their own scenarios (eg different discount rates or benefit policies) instead of taking management’s prescribed accounting assumptions as if they were certain, improving decision usefulness for valuation and credit analysis.

Pensions accounting under FRS 17, Retirement Benefits, and IAS 19 has been anything but “neutral”, leading to the closure of the majority of DB schemes in the UK and changing investment policy from a bias for real growth and income to one based on “matching” with low-yielding gilts and other bonds where the assumed inflation hedge is far from perfect in practice.

In addition, use of DB surplus to part fund DC or CDC, while cash flow neutral, is not earnings neutral under present day accounting.

This is incredibly useful, even to those who aren’t accountants, in understanding the use of surpluses. DC and CDC should be friends to DB surpluses!

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

Is this the best that the insurance lobby can do?

Posted on March 15, 2026 by henry tapper

 

The insurance lobby have teamed up with Pensions UK and the right wing press to derail the pension schemes bill. They have landed on a Clause 40 which gives any Government the opportunity to demand money is invested for the good of the country.

There is so much to do to get adequate pensions for millions of savers not in public sector pensions and not in funded DB schemes like LGPS, RailPen and USS.

Can we please stop making so much fuss about mandation? Relative to what Royal London and Hymans recently referred to as the State Pension gap (the £12,000 pa  people are on average short of) – mandation of investment is a sideshow.

I have to admit that when Rachel Reeves came up with mandation well before the election, I thought there would be trouble here from trouble-makers. I thought right.

Here is what articles in the Times have as their headlines.

Pensions UK gave the lobby trying to wreck the pensions schemes bill nearly an hour to spout this line and I am so sorry that I had to sit through Helen Whatley’s scripted rant.

The Times opens up its most recent rant with an attack on this Government as having it in for workers saving for their retirement.

Plans to force millions of pension savers to invest in high-risk investments will put retirements at risk, the government has been told….

and it goes on

But the pensions industry has warned that having your life savings invested in political vanity projects could cost lower-paid savers dearly while those with gold-plated public sector pensions will not be affected.

I am not the “pensions industry”, even if I work for better pensions every day of the week.

It is wrong , as I told Helen Whately , to see the ABI and Pensions UK lobby position as the position of the pensions industry. What we as a whole want is adequacy for everyone.  To suppose that what is going on is a Government trying to hi-jack pensions to get it out of trouble is fantasy. It’s been dreamt up by lobbyists who’d like to derail the use of DB surplus for the country (rather than the shareholders of insurers), It is picking at the detail of CDC which is a  way to improve on workplace pensions.

As with DB which the ABI see as a deferred bulk annuity, so DC is to them a kind of deferred annuity using “flex and fix” into retail annuities .

Who is behind all this nonsense?

The trade bodies Pensions UK and ABI have called for Clause 40 to be cut from the legislation entirely. Their  spokesperson is Yvonne Braun. Here is her argument

Braun said that while the Association strongly supported investment in the UK, it must always be driven by the savers’ best interests.

“Any power to mandate how pension funds invest, if used, creates a very real risk of artificially inflating demand for certain assets. This is fundamentally against how investing should work and increases the risk of asset bubbles that can deflate or burst, with savers bearing the cost,”

The Times concludes that its readers can only escape the defaults hi-jacked by Labour by opting out. Steve Webb is roped into their argument with his answer to the question

“Can savers avoid it?”

One way to avoid mandation is to opt out of the default scheme on your workplace pension, but this brings its own issues,

said Webb.

“You’ve got to know what you’re doing. OK, you don’t want to be in the fund that the government is controlling, but what do you pick? Do you pick the global equity fund, or the balanced fund, or the sustainable fund?”

Savers may opt to move their money if they feel that a particular fund no longer works for them, but they may end up paying more in fees in the long run.

Steve Webb and Ros Altmann have been quoted in this article. I know both and I know they are not against policies that get growth back into our pensions. Clause 40 is not worth the bother – Steve , Ros and other good people – let us not be captured by the ABI’s opposition.

I am ashamed that we are being allowed to be characterised as a part of the ABI lobby that has become the ABI/Pension UK lobby. I am shocked that sane voices such as Steve Webb’s are being used as part of an article that echoes Helen Whately’s opposition.

Can we please turn our thinking to how we can be on the side of pensioners as well as Pensions UK. Right now , I cannot do both.

 

 

 

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

Hymans discuss the challenge and opportunity for bosses to pay adequate pensions

Posted on March 15, 2026 by henry tapper

For Methodists and Presbyterians among you, Calum and Mark discuss pensions strategy with the church the Wesley brothers preached  their post-ignition sermon in clear sight behind them. The church is now presbyterian but it has a Wesleyan root!

Calum is Scottish, Mark is English , they are both passionate to make retirement adequate for those who get pensions from the trusts and employers they advise.

Here is an excellent alternative to the LCP podcast I wrote about earlier this morning.

Mark is producing a report on adequacy. I think the essential question is whether employers focus on adequacy or flexibility or try to find ways to do both. I suspect some rich employers with well paid staff may focus on the flexibility of “fix and flex” drawdown from DC and those who have to prioritise adequacy for their staff, will move to CDC.

The boys want employers to take a step back and strategize, as Calum tells us

“I have had 20 years consulting and I have never seen so many balls in the air”

Having spent a few days in Edinburgh where these questions were not being framed with quite the cogency that Mark and Calum frame them, I advise you spend ten minutes with them and then consider where your employer is on this!

Challenge and opportunity

I do not see the debate being just between the Finance Director , the Human Resources Director and the employee benefit consultants. I see the workers voice arising through unions who see an opportunity to press for adequacy rather than flexibility and I see the richer employees wanting SIPPs rather than CDC!

Most large employers have heard demands to keep DB schemes open, then pay more into DC, now the demand from workers and unions may be wider, especially with a pension dashboard spelling it out to ordinary pension savers.

There is a challenge here but there is also an opportunity.

The State Pension Gap

Mark Stansfield’s work suggests that there is typically a £12,000 pa gap between what pensioners need and what they get. This echoes recent work by Royal London which is referred to as the state pension gap.

Calum sees this as a £250,00 shortfall in the pot. The Pensions Commission is due to report on this gap and gaps based on gender and ethnicity too. Bottom line is that “adequacy” is an issue for everybody. For Pensions UK and the ABI, the answer is to increase contributions from payroll into workplace pensions from 8% of band earnings to 12%. Unfortunately that is not happening either at the employer or Government policy level.

Mark points out that at some point after October 2026, individuals will see their pots presented as pension on their phones and other devices. Even if the presentation is of annuities purchasable as level income, they are unlikely to make for comforting reading for ordinary people. Employers will need to move nimbly and move early, if they are not to suffer a backlash from staff feeling cheated.

Compliance or Competitive Advantage?

For most employers, compliance with the pension rules that will follow the enactment of the Pensions Bill will be all that bothers them. For a substantial minority, competitive advantage will be the drive (or perhaps fear of dissatisfied staff and their unions).

Calum and Mark ask if there is an early mover advantage for employers who want to upgrade their pension offering. For such employers, the pension offered to staff is second only to salary and I can see progressive employers moving towards whole of life CDC rather than offering less pension in favour of flexibility. But there is a type of employer who will go towards defending freedom and flexibility and some towards the kind of pension that staff expect from the state and from time in DB schemes.

What should employers do?

Calum and I have a little discussion about what might follow in the months to come. I include it here but if you click through to the comments you can see not just this conversation but useful comments from Richard Smith and others.

Posted in pensions | Tagged , , , | 3 Comments