Retirement CDC – uniquely legislated for one master trust?

Posted on September 30, 2026 by henry tapper

Turning pots to pensions continues to be a subject that excites audiences who are committed to DC. This week Tom McPhail and James Hawkins appear to have had a good argument about whether Retirement CDC is an irrelevance with the Pension Schemes Act introducing Guided Retirement and default lifetime income.

It would seem hard to argue that Retirement CDC will be relevant when it becomes the way that those wishing to turn pot to pension are guided to. This is what WTW are intending to do with LifeSight, their DC master trust.

But when Retirement CDC is offered as one of several options (fighting with annuities) it is hard to disagree with Tom McPhail that it will look pretty irrelevant.

So far , WTW are the only master trust who have committed themselves to this rival to flex and fix. Tom is his usual political self!

Advisers and consultants attending the event seemed to agree broadly with independent expert and trustee Tom McPhail’s opinion that RCDC “sounds a bit like the financial services equivalent of socialism — a good idea in principle that never works in practice.”

I and my colleague Chris Bunford have argued on various digital platforms that waiting for a Retirement CDC option to appear is not a good idea , even if you are a socialist!

We don’t know yet how the legislation will look that delivers the chance to move to a Retirement Collective Pension  from 2029.

It will have to incentivise DC providers and their trustees to take on the considerable cost of setting up as a CDC proprietor or pass the second half of a savers career inside the master trust to a third party. So I think it unlikely that many master trusts or workplace GPPs will offer an “R-CDC”.

And the socialists (I think Tom means unions) are looking at CDC as an alternative workplace pension not as a decumulation option for a DC plan.

Where the vast majority of DC money is, is in schemes that people are no longer saving into. Tom explains that these include SIPPs taken out before Auto-Enrolment and now known as “legacy” within the pension industry. Could these be the obvious funders of Retirement CDC. Here the regulation is not with  the Pensions Regulator and is with the FCA until money becomes a Collective Pension.

What would be needed for a collective solution to be well funded would be bulk transfers of pots under guided retirement but this would mean a regulatory kafuffle (as Tom points out).

McPhail however express concerns with this regulatory direction, questioning whether it was wise to put members into any retirement solution without first establishing more about their individual needs.

“I think mandating a default solution that you put people in without talking to them is a recipe for disaster,” he said.

The difficulty is seeing a business model that works unless there is a captive audience (as Lifesight’s membership is), James Hawkins of Isio sees plenty of interest in providing the service but I’m not seeing it.

Isio’s Hawkins said they had seen interest from a number of providers, including those with “brand recognition” among retail investors. 

While recognising the challenges around scale and communications, Hawkins made the point that RCDC remains “the best options we have” for a large cohort of savers who remain disengaged from retirement options.

He said: “RCDC is good for the masses. It provides an easy solution that generates income for the individual, typically at a third more than a standard annuity.” 

All the interest is in UMES CDC – the workplace “whole of life” version.  It is being authorised now and while consultants are arguing to hold on – employers, unions and providers are moving ahead.

If UMES (whole of Life) CDC grows as expected by firms as various as BlackRock and Gallagher, then DC master trusts will be threatened by employers not only switching their member contributions but demanding their member’s pots be transferred to their workplace pension scheme.

R-CDC is good “for the masses” but the CDC we’ve got now is better still. I may not often be in pace with Tom but here I am. R-CDC looks to have been sidelined by alternatives!

As with Royal Mail’s CDC , WTW looks to be involved with a second rarity! The R-CDC looks a brilliant and iconoclastic answer to a unique problem.

 

 

 

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A leasehold bill is coming but it’s watered down

Posted on September 30, 2026 by henry tapper

Leaseholders are pensioners or will become pensioners. To suppose that leasehold is not an issue for pension folk is to miss the point, health, housing and pensions are the three major financial issues that we all face as ordinary people.

I have been with Harry Scoffin and a small number of campaigners including pension journalist Norma Cohen in demanding action from a Labour Government we hoped would be on side of fairness to ordinary people. So a first glance made us sense a new stance…

A second glance was not quite so optimistic. A central request from leaseholder association Free Leaseholders had been ignored as Norma pointed out to the Housing Minister

In case anyone thought that the freeholders would let our Government do what is fair, this leasehold bill is sadly a watered down version of “good”;  it’s given in to those who make money out of leaseholders, ratchet up rents and drives flat resale value down.

The worst case was that there was no bill and we were still waiting for action over ground rents in 2029 (and then another wash-out).

What was needed and was called for within parliament will not be set down in a bill.  Leaseholders will still be at the mercy of rapacious property managers.

We have the biggest gap between house and flat prices for thirty years.  40% of flats have become unmortgage-able due to service charges being in excess of 1% of property value. This is not being addressed by the proposed bill.

The rights to manage the property at a price that works for freeholders will still be in place. There will be little change for many who are suffering from over-charging and under-delivering management changes. This bill’s a halfway house , just as the means to abolish ground rents over 40 years is a halfway house. Leaseholders will still pay £250 a year for nothing.

I hope that the organisations looking to offer pension funds an opportunity to invest in residential property are made aware of the failures in the governance and regulation of leasehold and step in where the Government has watered down protection for leaseholders – and bottled it (pun intended).

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Steve Webb and Andy Young reacting to new triple lock

Posted on September 30, 2026 by henry tapper

The announcement that the triple lock we have today will be over in four years time isn’t quite true. There will still be 2.5% increases, CPI inflation increases and there will be an earnings underpin which will come into play in certain circumstances.

So how do people who have worked on the State Pension react?

In my book this links  the two most knowledgeable people about the politics of the state pension that there are. They planned and saw through the changes to the transfer from old to new state pension (which is still in transition). They know where the winners and losers of the inevitable subsidisation are.

Let’s look at what is being said . First Sir Steve Webb..

and now Andy’s Young response

Of course there is a second view that comes from the IFS

I am sure there will be plenty of earnest lectures on how this does or doesn’t save the Exchequer money at the expense of the pension that wrinkles would have got under the old lock and will under the new triple lock.

There will be other conference sessions about long term care for those who need it and how it will be “free”. There will be discussions on how the fate of the elderly will have been rebalanced away from a pension payment to an insurance that in calamity there will be LTC as free as the NHS.

I see this as good news. Because people do not relate to proposed changes as Burnham has mooted, without knowing how they will pay for it. As I have written recently, it is hard to agree to set aside money as tax to the Government without understanding what it’s paying for and now that’s clearer. We will be getting free (er) long term care if we need it and as Webb and Young cotton on to, how free will depend on how effective the new triple lock is as paying for it.

The IFS go on producing charts that we will spend hours trying to understand but the success of this change (which will happen beyond this parliament – which may mean never), is down to our perception of fairness.  Here we will be led by a few people who know and I will follow Webb and Young,

Here is the IFS’ second chart that puts this proposed new triple lock in the perspective of the old triple lock and what would have happened since the introduction of the old triple lock in 2010

Got that? No – I haven’t either and all I can tell from these charts is that folk like us, outside the economist and actuary’s tent, will have to take this new formula as fair or vote against it in 2029.

The real question is – as Young and Webb point out – whether the new triple lock generate enough to pay for the new long term care from the Government. That will undoubtedly be a much more interesting discussion to most of us

 

 

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We have a false faith in Government to sort all our care worries.

Posted on September 29, 2026 by henry tapper

Stephen Bush has a great article out on the FT that compares Burnham’s policy making on welfare to the problems for musicians, what’s top of the pops these days is beyond the tastes and listening of most people. There are people who have bought the record but most people don’t even know the number one.

Most people think they know about pop music but they don’t know what’s going on and live on a hope that music is to their taste. Stephen Bush concludes that for Andy Burnham the problem is not that he’s got a few people buying the record but that most people don’t even know what he’s so passionate about.

Yes, he must persuade people that his preferred solution to the social care crisis is the right one, but, before that, he must reach the large number of people who aren’t even aware that there is a crisis to begin with.

Burnham made sense on  Laura Kuenssberg’s show when he spoke of the recent bereavement and of the experience we have all had of someone close – a friend or a family member, who has suffered the consequences of a slow and horrible financial squeezing that occurs when people needs long-term care. But it’s not something that will happen to us, it’s something that’s another person’s problem

Stephen concludes

Convincing the British public to pay higher taxes for something they wrongly assume the state provides will not be easy

It is much the same for most people who have houses that they own or nearly own because they’ve been paying the mortgage like a tax. The house will settle everything until they find what losing the family’s house is.

These are the choices that we really have. To lose the house or remortgage using equity release, or to rely on the NHS and find that someone really close or even you, are unable to leave hospital because there’s nowhere left to go and no one prepared to look after you,

These are the tough realities that lie in wait, they are not the songs we thought we’d find at the top of the chart, they’re songs that we’ve never heard and find unsettling. We turn away and retreat into misconceptions of what the days ahead will be like.

I worry that we believe that we think pension saving will get us out of this problem. It won’t, it will need increased taxation of some kind that will restrict our capacity to save  (even with tax relief). We are hoping to see pension saving mandatorily increase to 12% (Pensions UK’s number) and that may be more comforting, a song of yesterday.

But tomorrow’s song has yet to be recorded and when Andy Burnham explains what it’s about at the Conference this week, I worry that we’ll go back to the old comfort that the NHS will take care, Government cannot pay for that from its dwindling coffers.

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Labour Conference promotes CDC

Posted on September 29, 2026 by henry tapper

This is a First Actuarial morning for me. It is the only consultancy I’ve worked for which made sense to me and they’re at it again, working with TPT to promote CDC at the Labour Party Conference.

You may consider it naive of me to give credit to a competitor (TPT) but not a bit of it. TPT are the only one of the multi-employer collective pensions organisations preparing for authorisation who have the money to run an event like this!

We certainly don’t right now! Thanks to Andy O’Regan and Ruari Grant for what they’ve to get a packed room

I can thank the folk pictured individually and collectively. The Pensions Minister has been an advocate and was again yesterday. TPT’s Ruari Grant reports

The minister made a key reference to cdc as ‘pensions’, as opposed to DC which he categorised as ‘savings pots’ and thus highlights exactly what cdc is trying improve on.

David (Lord) Pitt Watson has been promoting CDC and collective pensions since early this century. He’s got to the House of Lords and is now a Treasury Minister. He has to be a most important figure in the Labour Party by now!

Andy O’Regan is Client Strategy Officer for PTP and announced his being the Chair with this statement

we’ll be discussing how Collective Pensions could help deliver more predictable retirement outcomes and what needs to happen next to support wider adoption.

Sue Ferns, Deputy of Prospect Union is precisely the person who can create wider option of CDC. I know her union well and will be promoting CDC with them at a member webinar tomorrow.

Finally Craig Moran, who I have worked with and is a stalwart of First Actuarial in the north west. He takes over the mantle of Hilary Salt and Derek Benstead who brought the idea of CDC to CWU and Royal Mail, breaking the breakdown between the two when things looked bad.

Much has moved on but the basics of collective pensions remain the same and CDC has been a cross-party initiative which for its first six years had the support of a Conservative Government.

So well done TPT for putting this on , early on a Monday morning in Liverpool. There is not much support from Pensions UK for CDC but there is plenty of support from CFOs and HRDs who sit on large employer boards. It is large employers who will lead the way for by and large they are unionised and it is unions who are pressing hard for an upgrade from DC workplace pensions.

CDC needs all the publicity it can get

We need to take this conversation further. We won’t get much at another conference in Liverpool coming up shortly – the Pensions UK annual conference. There only one session (at the back end and one of three concurrent sessions) looks at CDC.

I’m not able to go there either (I cannot afford it and I haven’t the time right now).

I will be speaking at the East Midlands Pensions UK  meeting on Thursday and am grateful for being given a chance to support the workplace CDC that is both collective and a pension!

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“We’re against mandation till it suits us”…. Pensions UK call for more money.

Posted on September 29, 2026 by henry tapper

We spent the first half of the year hearing the pension reformers of Pensions UK complaining about mandation of investments to improve domestic growth. The second half of the year looks like a return to a call to mandation of more employer and employee contributions into workplace pensions.

This will go down like a lead balloon at a Labour Conference that is heralding a “cost of living” budget. The big feature of the Prime Minister’s speech was an NHS style social care system that will benefit mostly the old. The talk of the commentators on the Labour Conference at Liverpool is how the country will pay for that free social care system. The talk is that we will swap future increases in pensions for better healthcare for the elderly.

The triple lock is one candidate for savings but that won’t be before 2030 so for the time being the “cost of living” story will not include a demand that more of our wages are deflected into saving pots. It is not a “cost of living” measure, it does not help us pay for free social healthcare for those in later life. It is at the very back of the politicians queue.

What’s Pensions UK argument for change?

Pensions UK has conducted two surveys both employees and of 251 small and medium sized employers

Pensions UK noted support for AE increases was strong among small and medium-sized employers, with opposition being concentrated among micro-employers (with between one and nine employees).

It found that three quarters of these companies would pay more if they were given time to prepare for it. As an employer of two such workforces , I take it that means we get time to adjust salaries to meet the new obligations to increase employer contributions, these will be coming out of increases if they come.

People are skint and more austerity may sound good among employers so long as there’s a reward strategy that give them time to explain to staff and their representative. For the very small “micro” employers, there is no wriggle room , they are not for more mandation of employer contributions as they don’t know how to sidestep its cost to the P/L.

Not surprisingly, most employees want more money going into their pension pot.

The survey of 1,623 working-age adults – conducted on behalf of Pensions UK by Yonder Consulting in July – found more than four-fifths (82%) of respondents said under-saving for retirement is a key issue in the UK. Furthermore, nearly three-fifths (57%) said they did not have confidence they are saving enough in their pension to maintain their current living standards once they retire.

But most employees also expect their money to pay a pension. The Government is playing the value for money card and asking whether pension providers can do a little better with the money that’s rolling in to workplace pensions.

The survey did not explore whether these employees would swap paying more for a bigger pension in retirement. If you believe the large consultancies that predicted CDC could increase pensions paid to employees by over half, it is surprising to me that Pensions UK are giving as the choice for members an increase in mandation as the only option than remain under-pensioned.

Pensions UK also found when asked whether AE contribution levels should increase, decrease or remain the same – with just under three-quarters (74%) said they should change, with 31% said they should increase compared to just 3% who said AE contribution levels should fall.

We have seen no inclination to pay more into people’s pots by our influential pension minister. Instead, we hear a lot of talk about paying more pension from the current saving and from what’s been saved to date. Hopefully , within this parliament we will see pensions advertised on the pension dashboard as wages in retirement and not  pots of money.

With the arrival of dashboards will be the arrival of the first wave of CDC pension schemes paying pensions and not pots, Collective Pensions will be marketed by employers to employees as a pay rise in retirement and rightly so. No one disputes that they will pay more than annuities and more securely than a drawdown from a pot.

What are Pensions UK doing?

We had a previous Government back in 2017 promising we’d be paying more into workplace pensions by mandation by now. Not only has it not happened but there’s no sign of it going to happen from a “cost of living” Government , committed to getting us a free healthcare for social care.

The way this Government has gone is to move towards Guided Retirement Income for Life for pension pots and pensions not pots for CDC. This seems to me the alternative to mandating further increases to auto-enrolment saving.

Employers want higher contributions, there is nothing that is stopping them. Employees want to pay more, there is nothing stopping them. If they knew what they were getting out, they might want to adjust the amount going in but right now the SMPI illustration is not doing the job.

Let’s get back to a system where our saving is buying pensions and not a pot of money. That’s what will make “pensions” a lot more real for ordinary people. Mandation of increased savings is no better than the mandation of domestic investment. We need to want to do it, we need pensions and not pots.

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Things not many pension consultants will advertise

Posted on September 29, 2026 by henry tapper

This from Jon Small of First Actuarial. This is of course the message that comes from both CDC and the Guided Retirement default pathway. It will be music to millions of people contemplating retirement seeking income from pots of money.

The Benefits of Doing Nothing in Retirement

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UK Insurance comes under more pressure from American Private Equity

Posted on September 28, 2026 by henry tapper

Emma Dunkley and Lee Harris tell  us

The changes come amid a broader slowdown in L&G’s core market of pension risk transfer deals, in which insurers take over British pension liabilities. Deals slowed in the first half of this year due to lower demand from the largest UK pension schemes, according to consultancy LCP.

This from a round up of insurance news in the FT this morning

Why Blackstone’s plans at Lloyd’s sparked a firestorm

Elsewhere, Blackstone, recent friend to L&G in helping fund the L&G buy-in/out deals is turning to by-passing insurers altogether..

Blackstone was the hot topic at the insurance industry conference this year in Monte Carlo after its plans to create a new insurance vehicle at Lloyd’s of London leaked, sparking a firestorm of criticism.

“Why the eff is Lloyd’s doing this? They’re bringing the wolf in with the sheep,” one senior insurance broker told the FT. “I don’t know if it’s a late-cycle stupid idea or . . . the future of reinsurance.”

The New York asset manager has held talks with Aon, the world’s largest reinsurance broker, about creating a syndicate that could allow it to earn returns on up to $2bn of premiums annually, people involved in the discussions told the FT.

Tensions have grown between private capital groups that have muscled into the insurance sector, and Blackstone’s move only adds to those. Reinsurers fear that they will lose business to more aggressive investors, writes Lee Harris.

Traditionally, insurance brokers discuss with clients any risks they wish to cover, such as cyber attacks or flooding, and then shop around for the best rates from carriers that will insure those risks.

But brokers have increasingly set up facilities in which they package up risk and send it to pre-selected carriers. This gives the insurers guaranteed business but has proved contentious since they give up control over vetting individual risks and setting prices.

The Blackstone-Aon syndicate would take broker facilities a step further, giving a broker the ability to send risks straight to a private equity backer. This would allow Blackstone, in effect, to substitute its funds for the balance sheet of a traditional insurer.

“All our Lloyd’s investments will continue to be made within the established Lloyd’s approval and oversight frameworks, alongside existing established market participants,” according to Blackstone.

Aon said that its clients “expect our firm to develop . . . solutions that consider all forms of available capital”.

“It’s not generating new business, it’s just more capital for existing business” that could push prices down, Aki Hussain, chief executive of insurer Hiscox, told the FT, at a time when the price of commercial insurance is tumbling.

I must admit to liking the sound of cheaper insurance but is cheaper value for out money? Is the backing of insurance company deals maintained by giving it to a private equity house. We have been asking that question for some time in the Life Assurance annuity market. Now it looks like Lloyds of London is asking the same question.

What is happening in the UK now has been happening in the US for some time. This from today’s FT

Buyout funds, the private capital industry’s largest asset class, have for the past four years returned far less cash to their backers than in the previous decade as a result of sluggish dealmaking. That has left backers of those funds, including large pension funds, buyout executives and increasingly individuals, seeking other sources of liquidity while their investment remains locked up.

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Pension, health and housing – welfare for those working and retired.

Posted on September 28, 2026 by henry tapper

I am pleased that Calum Cooper,  a pension professional is picking up on key themes promised to be discussed over the next few days in Liverpool and the Labour Party Conference.

Good pensions do not operate in a vacuum, they are part of the deal we offer older and younger people. The older need a health care system that cares for them when they can’t care for themselves. The younger need to have a chance to get into property they can afford and which provides them financial security as they grow older.

I am pleased that the Labour Conference will take on these two problems. There is no need for policy time to be spent on pensions, we have reform of DB and DC underway and the introduction of workplace Collective CDC Pensions already here. The State Pension continues to be prioritised to meet the needs of those who rely on it (most of us).

Welfare is tripartite;  pension, health and housing . This Conference will deal with the two that pension people need to better understand.

 

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Pension funds- join the struggle for leaseholder freedom

Posted on September 28, 2026 by henry tapper

If pension funds are to invest in UK residential property , they should sort out leasehold

Thanks to those who are contributing to this debate from the leaseholder’s point of view. This is for a Labour Government at the time of its 2026 Conference

When we are running pension funds it is for people, not to satisfy companies who offer residential property investment.

Whether through direct investment or through funds, there are residential properties within the portfolios are becoming leasehold traps for the people who rely on funded pensions in retirement.

We cannot have “affordable housing” where rents are rocketing and re-sale values plummeting. Pension funds must promote change to leasehold and the promotion of common hold.

Whether pension funds are DB, DC or CDC , money in residential properties needs to work for those living in the properties as well as pensions taking low risk profit.

Please pension funds remember the S in ESG. Make it clear that you are on the leaseholder’s side , even if you are buying freehold property to sell on as  leasehold flats or let at a profit rent for pension funds.  You need to focus on a fair deal for both pensioner and the residents of the properties you are buying.

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