Harry Scoffin is not speaking for himself, he’s speaking for his generation and all generations trapped in leasehold flats they cannot afford to keep or sell.
His latest appearance was in Westminster where his fervour ignited Cove and Rayner later in the session. There has rarely been a performance in a select committee like his. He has produced an edited highlights for us and we should watch it this weekend/
Katie smith speaks for Aegon when she calls for a 2 year trial period before VFM bites. She calls it a “trial period” and it’s an attempt to kill VFM before it kills providers.
Here she is in Corporate Adviser
Aegon UK has called for a two year trial period for the government’s upcoming Value For Money pension scheme framework, arguing that the “fiendishly complex” concept could not be widely adopted without full testing.
Aegon made the statements during an ongoing consultation period overseen by the Financial Conduct Authority on the framework. The latest consultation closes on March 8, and looks to address areas such as the introduction of forward-looking metrics to be considered alongside backward-looking metrics in assessments, and a four-point rating system rather than three, to allow identification of top performing pension funds.
Aegon claimed there is ongoing uncertainty over implications of forward-looking investment metrics, and that a feasibility study was needed around the new market comparator proposal, with Aegon calling for a two-year trial period of the framework.
This would mean that the public (aka the press) would not have acess to information till the next decade
Kate Smith, head of pensions at Aegon UK, said: “We support the aim of ensuring all workplace members are in a scheme offering value for money judged across investment performance, costs and charges, and quality of services. But coming up with an objective framework that covers all components of VFM across a diverse pension landscape is proving fiendishly complex.
It is of course a feature of VFM as most people understand it , that it is easy for someone to understand,
In the latest consultation, the regulators introduce several fundamental changes. These include a completely new market comparator database, the addition of forward-looking investment metrics, and a worrying downgrading on quality of member services and engagement aspects.”
Aegon argued for the proposed trial to be limited to the largest multi-employer default arrangements and the largest single employer trust-based schemes, with the data shared only with the regulators. It could then be launched fully and publicly from 2030, coinciding with the deadline for main scale default funds or mega funds to reach £25bn.
I have sympathy with the commercial providers. The time taken to report on VFM could make them uncommercial and could reduce their capacity to provide their clients with value for their money.
But what an opportunity they’ve missed. In the case of Aegon, AgeWage has run a VFM score for a GPP it runs for several years. We would be happy to let Aegon share the reports we provide to its employer and the members of the scheme. It is effective, cheap to run and it runs using a scoring system that is driven by the internal rates of return earned by each individual saver.
I do not think it is either expensive or hard to get the data to score individual performance nor to aggregate the individual IRRs against an individually marked benchmark score. It has been done millions of time and the only reason it isn’t in common use since it’s introduction in 2019 is the failure of the commercial providers to adopt it.
Katie Smith and Antonia Balaam
So while I am sorry for Aegon’s current predicament, I cannot say I’m surprised. The chance for it (and other commercial providers) to adopt a simple system endorsed by many experts means they are now left with something that is neither easy or effective.
There is time to go back and revisit the AgeWage system, but I have other things to bother myself with when it comes to VFM. Measuring accumulation of savings is fine if all you are interested in is what happens to retirement , but we are past that now. Now we have many members past retirement trying to turn pot to pension or simply cashing out.
We have a CDC pension that the Government reckons will adopt up to 60% more pension. Is anyone really considering the performance of DC accumulation as a measure of VFM?
Millions of defined contribution (DC) savers now have access to in-scheme retirement options, signalling a shift from a savings system to a pension system, the latest data from The Pensions Regulator (TPR) reveals.
The watchdog said its analysis of decumulation products within defined contribution (DC) occupational pension schemes, published today (5 March), showed that some 13.4 million members were now offered drawdown at the point of retirement, a product not historically available within occupational schemes.
The analysis comes in advance of the introduction of guided retirement duty in the Pension Schemes Bill.
TPR said larger schemes were “leading the way” in supporting members when they come to retire – noting that some 86% of the largest schemes offer members at least one retirement income option.
TPR said the shift towards drawdown being offered in-scheme is largely driven by the growth of master trusts – schemes it said that have the scale and governance to make it a reality.
TPR director of policy Joey Patel said: “These findings herald a transformation in the DC workplace pensions landscape ahead of guided retirement duty, with millions of savers now able to access in-scheme retirement options. This is just the start, however.
“Too many members in smaller schemes are left without support when they reach retirement. This is not good enough.
“We urge trustees to start getting ready for the Pensions Schemes Bill by reviewing their offer and starting to design their decumulation products.”
Patel added:
“If you are not able to guide savers into the right retirement options for them, our message is clear: you should consider consolidation into a scheme that can offer value for money solutions.”
Torsten Bell said much the same thing at yesterday’s TUC conference. If there’s one point of the VFM initiative from FCA and TPR it is to make it so tough on DC pensions who fail to jump the VFM bar that they have no choice to consolidate.
There is one exception to the “Size” game and that’s the UMES CDC scheme that is allowed to start small and big as if it were a new master trust.
We won’t see many new master trusts, but I hope for the sake of savers who want pensions, we get a few CDC schemes next year.
It is not expensive to run a payroll pension (any DB scheme will tell you that) but it is very hard to manage a fixed retirement income for as long as people need it, if you aren’t collective!
You have to be very big and friends with an insurer who pays annuities as you need them to. Rothesay have set the example with Nest and I hope that others will follow. Even so, it seems a tough way of going about it and I hope that as well as CDC “whole of life” schemes, we’ll see retirement CDC for those at that awkward moment when they choose to have their pot paid back to them.
The Pension Schemes Bill exempts CDC UMES schemes from the Size requirements that apply to multi-employer DC schemes.
As payroll is to “reward” so “administration” is to pensions, a name to file away a part of your operational world that doesn’t play much part in your strategy. That’s what I think corporate board and boards of trustees have done with payroll and admin respectively for as long as my memory lasts.
But yesterday , admin had its own conference at Convene which sits high above Bishopsgate in the City of London. No matter how much reputational damage administration has done to your brand, we all need administration and it was good to see Capita roughing it out through a bad time
There are two reasons.
The first to understand how pensions administration is coping with the arrival of artificial intelligence and what will be the need of administrators when administration may be outsourced to an artificial worker.
The second is to find out how advanced suppliers are to delivering the software and the service needed to run CDC scheme from 2027. I will not play shy here, this week and some friends registered a Mutual with the FCA to act as a proprietor and over the past few days and for a few months to come we will be procuring systems to deliver a new generation of DC that pays pensions rather than pots.
Well I learned what I already knew but had not articulated, that women do the work and men do the selling (dressed up as strategy). That’s not quite right but there are large parts of this country (caring being another) where the hard work that men don’t want to do , is left to women- who generally get under paid.
But I learned that if you give a woman a platform and some scope to express her views, you get a really informative session and we got several, most spectacularly from Jo Causon who explained what the Insitute of Customer Service does. Why she and this institute were not central to the Government’s VFM debate, I don’t know.
I had lots of questions about AI and lots of questions about the perception of administration outside conferences like this one. Can AI agents have a conscience, can they learn discretion, can they manage bereavment?
I had questions that spilled over from Torsten Bell’s earlier session (coinciding with TPR’s here which I missed). The Pension Minister said there were two few good administrators, it was too hard to get to them and once you had found them it was nay on impossible to move data.
I’m not sure who and what he was referring to, but it got a laugh at the TUC pensions conference.
Thanks to the organisers and the sponsors and thanks to the administrators who helped me understand most things!
You can find the details here.
These events are massively important with pensions in flux from legislation and technological revolution. Few attendants here will be in Edinburgh next week ;that is the Investment Conference, so I will carry a light for those I met anew or once again!
I learned a lot from the women who get things done!
John Hamilton
The Pensions Regulator has made an announcement of a change of attitude towards private DB pensions. Here is John Hamilton, chair of the Stagecoach Pension Trust, that has led change in the past six months.
My only comments here are that they focus on our past, on the savings we made in the fifty years+ prior to the closure of DB pensions earlier this century.
The spirit that wants to make the £1.2tr the DB pensions hold, invest in the UK needs also be applied to future saving.
Until recently DC had its own endgame with accumulation being the end of the savings game. That is changing, just as DB is changing. I would like to see the passion that we have from DB experts applied to the rest of this century!
We may not be able to return to private sector DB schemes (much as many I speak to still want to) but we can still pay pensions from DC, either through flex and fix drawdown defaults or better still – through collective DC plans that do everything that DB schemes do – but guarantee payments.
I am not quite sure where John Hamilton’s head is. Is he stuck in DB or has he an eye for what happens in the next 50 years (at least)?
I am looking to hear from the progressive DB trustees, managers and sponsors about what their plans are for the generations of staff who have no pensions, only pots!
I was not able to go to the Trades Union Conference but I could watch it from afar and did, oddly from Bishopsgate where a separate conference was talking about pension administration. Torsten Bell talked of pension administration and I’ll come to that, I tried to ask his question to pension administrators but to no avail! In short no one’s being very grown up and it will be interesting to see Torsten Bell’s spring statement goes down in Edinburgh next week.
The first half of Torsten’s pension statement was introduced as a reminder to union leaders that the pension and the economy are one and the same thing and that there isn’t much growth in our pensions (just as there hasn’t been much growth in the economy). The growth in pensions has come through because of pension credit’s increased take up and that is now levelling off.
The economy is (according to Torsten) now at last moving in the right direction and that is good for pensions and pensions could be being good for the economy. That is of course if the investment in Britain comes from LGPS and the private sector.
As both a DWP and Treasury Minister, economy and pensions are co-joined in Bell’s speech. The economy can deliver more pensions .We did not hear about the state pension but we did hear about the Pensions Commission , due to widen the 55% of people of working age who save into a pension. With a union peer running “PC2”, it is clear that it will be this Government’s legacy to later pension ministers , HMTs and DWPs.
But for now we have the Pension Schemes Bill and the CDC legislation to make for a pension rather than a saving system, There will be “bigger and fewer” pensions and the fractured LGPS is being brought together into a bigger pension with less pools.
Big Pensions can allow for active management of assets , active management being a sign of good governance. Small schemes can’t afford to actively invest. Those who think that VFM is the measure of good may want to erase these statements from their memory but this minister’s view of the future is quite opposite to the investment that has got DC accumulation to where it is today.
As we moved into contentious areas, Torsten was openly questioning what should be done. Surpluses were touched on , so administration which he saw as asking questions of how we manage bereavement and the at retirement decisions of all (but especially those with DC pots).
He pulled out a strange figure of “£29,000” as the potential improvement that could be achieved from better returns. Frankly, VFM does not seem of interest to this minister, in the sense that it is being sold to us by the FCA and TPR and if that number is what VFM means – I will need some convincing! His only compelling statement was that performance was now the employee’s issue (in DC/CDC) rather than the employers (in DB).
There followed some lines clearly fed him by the DWP and not as before from the Treasury
This led us into his expectation that whole of life CDC would be built this year for multiple employers and that retirement CDC would see legislation soon after the publication of the consultation.
I was not in the room to gauge the mood of the audience though I did get an invitation immediately after the event to the TUC pensions officer to speak on CDC in April, which suggests that the unions got the message that there is life beyond DC.
Bell’s departure from the hall was after the usual moans from frustrated advocates for pre-97 and WASPI rights and an unusually concise question from Bernard Casey on the Bill’s intention on mandation which Torsten Bell retorted
“It won’t be needed”
He emphasised that Mansion House was happening without mandation being used and a backstop is not needed when everyone is in agreement.
Bell is not showing any sign of turning down the volume. He was as full of himself and what he’s doing as ever. That’s what I want from a Minister and a Pensions Minister at that.
Like the Chancellor’s spring statement, Torsten Bell’s message was steady as he goes!
The pensions system largely functions well, some in the pensions industry have said in response to a governance consultation by the Department for Work and Pensions closing on Thursday but suggest extra rules around conflicts are needed. The Trades Union Congress meanwhile is calling for member representation on all trust-based schemes.
Responding to the consultation from mid-December, the Association of Consulting Actuaries said large schemes are effective but raised concerns about conflicts of interest in connection with defined benefit surpluses. Chair Stewart Grant Hastie warned about appointing connected firms and the employer’s power to appoint or replace a professional trustee.
“The latter will become increasingly relevant when trustees have increased powers to distribute surplus to the employer,”
he said.
The ACA suggested a process for professional trustee or sole corporate trustee appointments that includes notifying the Pensions Regulator.
The pension schemes bill is set to allow surplus extraction from schemes if trustees agree, potentially allowing surplus extraction down to low dependency funding. The ACA’s concern is that sponsors could seek to put in place trustees that are more willing to release surplus. The incoming legislation means some companies with a DB scheme in surplus are becoming acquisition targets, while others are already looking at whether and how they can secure debt over pension surplus, suggesting some sponsors are keen to access pension buffers.
The Association of Professional Pension Trustees said accountability was central in trusteeship. Chair Rachel Croft added:
“While proportional regulation allows schemes to focus on substantive matters, regulatory demands can present challenges, especially for smaller schemes. We believe that the growing and now well-established professional trustee market continues to deliver substantial expertise and continuity, including facilitating improved strategic planning for complex transactions and long-term schemes.”
The APPT argues that potential conflicts for sole trustees are addressed with the Professional Corporate Sole Trustee code of practice, and is against restrictions on the number of appointments held by professional trustees, seeing monitoring, risk management and quality control as more effective than “fixed restrictions, which may inadvertently result in negative consequences”.
It prefers strong principles and industry accreditation – with accreditation eventually becoming mandatory for professional trustees – to “arbitrary limitations or statutory regulation”.
The Society of Pension Professionals agreed the current trusteeship framework is working well for the vast majority of members. It too is against limiting the number of trustee appointments or length of tenure, saying that “periodic independent governance reviews would provide a more effective safeguard”.
Jo Fellowes, who chairs the SPP’s Administration Committee, said:
“The UK’s trust-based pension system is fundamentally strong. The SPP believes that reform should build on what works, i.e. proportionate governance, professional expertise and clear accountability, rather than impose arbitrary restrictions.”
Among others, the SPP would instead like a
“clearer delineation between trustees and executive management, particularly in large master trusts and megafunds”.
As MNTs are not required to sit on trustee boards in a number of scheme and governance structures, the society is in favour of member advisory panels, surveys and impact assessments to ensure the member voice is heard.
The consultation itself admitted that
“with a more consolidated market there will inevitably be a move away from the traditional lay trustee board”.
However, MNTs are clear they do not see a move away from member representation on boards as ‘inevitable’. Member trustees are the only group with “skin in the game” in the decision making of the pension scheme and with no business interests in the process, said the Association of Member Nominated Trustees, warning this cannot be replicated in other ways.
“They undoubtedly want what is best for members because it is best for them too,”
said Maggie Rodger and John Flynn, who co-chair the association.
They called for member representation across schemes to be mandatory, including on master trusts, megafunds and collective DC schemes. MNTs
“may be ‘lay’ to the pensions industry, but they often bring vital professional skills in areas such as HR, law and finance”,
they pointed out.
Trustee firm Independent Governance Group takes a different view, citing fiduciary duty. Louise Davey, trustee director and head of policy and external affairs at IGG, said:
“It is critical to remember that acting as the ‘voice of the member’ is not the solely preserved to lay trustees; acting in members’ interests is the duty of any trustee, and that includes effective communication and engagement.”
The Trades Union Congress has now thrown its weight behind member representation across schemes, including multi-employer schemes. In a new report produced by policy researcher Daniela Silcock and published today, it recommends:
General secretary Paul Nowak said:
“Pension schemes deliver better outcomes for members – and ultimately a better quality of life in retirement – when those members have a say in how they are run. As the government looks to move to a system of fewer, bigger pension schemes, ministers should look to Australia and Canada to see how member representation can help to ensure those bigger schemes deliver better results. All workers deserve to retire in dignity. It is vital that pensions are governed fairly”.
The TUC have launched this report and it will be debated at its pensions conference this morning.
This week, a group of friends launched a Pensions Mutual to take forward this idea in CDC.
Pensions Mutual supports the aim of this 40 page document
The TUC report Member voice in pension scheme governance: Making member representation work at scale is available to download here.
This report will be launched with a panel discussion from 10:30 to 11:30 at today’s conference.
I hope that it gets in front of the Pensions Minister who is speaking at this Conference at 10: am.
I opened this article yesterday and my eyes glazed over! This all sounded very technical and daunting to a person not expert in actuarial valuations.
But a few hours later I got this from my postman. He was delighted to know he was going to get richer from an increased payment from a scheme paying him a tax free cash sum and a letter telling him he’d get a pay rise of 6.4%
He was so pleased he’d googled to get more news, at first he got the calculator , the pen and a lot of graphs with which I started this article. Then he got something that made a lot more sense.
And then the former postman sent me this (to my phone) which he’d picked up from Emma Simon on Corporate Adviser
The postie asked me for my thoughts as he’d read those of Helen Draper and Steven Taylor of LCP (all this arrived in one go on my phone). I said it meant he’d be getting hefty pay rise and that he should be proud because he’d made it easy for other bosses to set up CDC schemes for their staff.
I told him that Royal Mail had done something very brave and opened the door for others. That was not pub talk. Pub talk was to tell his former colleagues they were getting nearly six and a half percent pay rise in their pension pay and those yet to take their cash could expect to see more seven and a half percent more as a cash sum when they took their pension pay.
He was pleased. I hope that the Trade Unions, who are meeting today to talk about pensions will want to get more employers following Royal Mail as Helen and Steven think they will.
And I hope that they will talk of pensions as pay and increases as pay rises, because that is how my postie talks and that’s how we have to explain CDC to the millions of people who’ll be getting a CDC pension in years to come.
I can’t go to the TUC pension but I’ll be following it on my phone like my postie friends. I think that unions are critical to the spread of CDC and will do more for people’s pensions than can be done with calculators and graphs.
Torsten Bell – pension minister is on at 10am.
