I was pleased to read this statement from TPR. The action by TPR was taken against those deemed to have harmed this pension scheme. Here where TPR found deliberate steps were taken to avoid payment of a section 75 debt before an employer was liquidated.
The threat of issuing a contribution notice plus compelled interviews and a fine against the employer’s accountants for failing to provide TPR with requested information has resulted in a settlement that TPR is happy with.
It is about time! There have been opportunities for the Scheme’s trustees to have exercised their demands for employers to pay up to get out. I hope that TPR would have been behind them preventing harm to plumbers still in the scheme.
TPR uses anti-avoidance powers to protect plumbing industry pension scheme
Tuesday 28 July 2026
The Pensions Regulator (TPR) has warned participating employers in the Plumbing & Mechanical Services (UK) Industry Pension Scheme that they face regulatory action if they seek to walk away from their pension liabilities leaving other employers to foot the bill.
TPR has today published a report setting out its actions to protect members and businesses after a participating employer in the scheme paid out dividends prior to the company’s liquidation – money which should have gone towards funding people’s retirements.
The regulatory intervention report details how it took steps to exercise its anti-avoidance powers against Cliden Construction Limited (CCL) resulting in a settlement being reached with a former director of CCL and a related company.
Many defined benefit (DB) schemes are better funded than at any point in recent memory, with around 90% of schemes fully funded (on the ‘technical provisions’ basis). However, a small proportion are in deficit.
The multi-employer plumbing industry scheme, which has a deficit of around £258 million, is an industry-wide DB multi-employer scheme with over 30,000 members. The scheme is sponsored by more than 300 employers.
Participating employers leaving the scheme are required to pay a debt to meet their share of a pension deficit. If an employer fails to pay its debt, the liability is distributed across the remaining employers.
Gaucho Rasmussen, TPR’s Executive Director, Enforcement and Legal Group, said:
“Members rely on pensions to provide them with a sustainable income in retirement and employers cannot simply walk away from their responsibilities.
“While we aim to prevent harms through constructive engagement, we will not hesitate to use our enforcement powers where necessary to secure positive outcomes and as a deterrent against this type of behaviour.
“We will continue to work together with the trustees of the plumbers’ scheme to ensure that employers understand the importance of paying their debts to the scheme and the potential consequences of not doing so.”
CCL triggered a debt under section 75 of the Pensions Act 1995 in early 2019 when it ceased to employ active members of the scheme.
TPR’s investigation found that CCL, alongside connected parties, had taken a series of steps to avoid its section 75 debt. These included issuing dividends effectively removing funds that could have gone into the pension scheme. CCL later entered liquidation in June 2023 with the debt still unpaid.
In response, TPR launched an anti-avoidance investigation culminating in a Warning Notice seeking Contribution Notices against CCL and connected parties.
TPR used a range of its legal powers in the case including compelling witnesses to attend interviews on three occasions to provide information, and fining CCL’s accountants for failing to comply with statutory information requests.
Following the Warning Notice, a settlement was reached with the relevant parties, and funds have now been paid into the scheme.
This is a an article from Damien Bowden who has been a proposition manager at large firms. He wants to know that he and others joining a CDC plan have the opportunity of opting out. He is right to bring this to people’s attention as it is an area that schemes could be unfair, hoping to restrict people from transferring by offering poor transfer values. I hope that this is something that TPR is considering in its due diligence that forms part of authorisation. It has always been an area of mystery to those looking to transfer out of DB schemes. CDC should be standardised so that actuarial discretion is limited.
Damian Bowden
Helping develop propositions that balance customer outcomes, regulatory expectations and commercial sustainability.
Introduction
CDC should be permitted as a default retirement solution only if members can opt out of CDC and into a comparable DC route without losing employer contributions. Otherwise, CDC risks becoming an economic lock-in for those who do not want to use it.
The ethical test for CDC is whether an active member can reject the collective wrapper without being financially penalised. The issue is not CDC itself, but whether implementation preserves choice for members with different needs without having to sacrifice outcomes e.g. employer matching.
CDC is more restrictive than a normal default fund
CDC or Collective Defined Contribution scheme where member and employer contributions are invested collectively and used to provide target benefits which are likely to improve overall outcomes on average. Most pension members want something simple that is managed for them but for those who want choice – CDC is a restrictive nightmare.
Instead of opting out of the default, you are now stuck in it, because your employer decided that this would be the best option available. Limited member choice already exists in auto-enrolment, especially if your employer chooses a scheme that does not have the fund selection you want. This is not a criticism of auto-enrolment as it has drastically improved pension participation however CDC risks extending the weaker aspects of the policy.
At least with a DC pension you can opt out of the investment choice or make a different choice however with CDC you must reject the scheme. If you are unable to opt out of CDC whilst still receiving contributions – you are practically locked in with your choices removed.
Active members face opportunity costs
Members with different needs arising from different risk appetites, ethical preferences, retirement timings or other planning considerations may lose out due to the CDC model.
This can lead to large, compounded differences over time, eroding future wealth generation due to not being able to invest with your risk or ethical practices. Those who want to take more or less risk, invest according to their ethical principles or align their pension with wider financial planning should be able to without suffering financial penalty.
Looking at the chart which has been amended from Corporate Advisers: Best and worst default funds over the past 10 years with the world index and S&P 500 added in for comparison. Different asset allocations can produce materially different outcomes over time which is why active members may value investment choice. The chart is not intended to prove that active members will outperform defaults, but to show that asset allocation and provider design can materially affect outcomes.
Amended chart from Corporate Adviser
The difference in providers is stark, and would we expect to see such a difference with returns within differing CDCs? Although it may reduce individual risk, it will still produce different outcomes based on scheme design due to investment strategy, actuarial assumptions, smoothing policy and governance.
We can argue that democracy itself is the majority asserting its will on the minority and I could understand a utilitarian approach that better average outcomes for the majority should be prioritised. CDC may be justified in restricting some freedom for better average outcomes but the fairness on those who wish to sit outside of a CDC scheme should not be so easily ignored. Good policy, however, should lend itself to safeguard choice for a minority when it is feasible. A dual pathway model for active members creates the safety of CDC but maintains the DC individuality for those who seek it.
Pension Freedoms and decumulation flexibility
Pension freedoms introduced choice into pensions and in that case also complexity. You only retire once, and a lot of decisions happen without the ability to take it back. CDCs look to smooth some of this complexity with the scheme able to design the retirement income structure or pathway for members.
CDC legislation does not prescribe a single standard benefit shape. Instead, each CDC scheme must have an authorised scheme design, supported by scheme rules, actuarial advice, modelling and TPR authorisation. In practice, this means the structure of benefits including the balance between target income and any lump sum is shaped by the scheme design rather than selected individually by each member.
For example, the Royal Mail Collective Plan provides a one-off lump sum which, for each year a member pays in, is 3/80ths of pensionable pay in that year, based on taking it at age 67. This illustrates that lump sum design in CDC may be scheme-led rather than individually selected.
Royal Mail CDC Lump Sum
As a result, members may not experience tax-free cash in the same way as they would in individual DC drawdown, where many expect to access up to 25% of crystallised benefits as pension commencement lump sum, subject to tax rules and allowances. The issue is not necessarily that CDC may remove lump sums, but that it may reduce member control over the amount, timing and shape of retirement benefits.
A common edge case may be a member with a government pension scheme who does not need another source of income but rather wants the benefit in form of lump sum payments. This would be possible in some cases but if employers are having to choose one scheme for all, without a dual approach it may lead to worse outcomes for someone.
Opt out is only meaningful if employer contributions are preserved
At the moment if you opt out of your DC workplace pension you forgo any employer matching. Employer contributions are effectively part of total reward and can represent an immediate uplift that is difficult to replicate through any investment strategy.
These are a key part of the overall compensation received for working.
If a member decides they do not want to be enrolled within a CDC because it does not fit their needs, then it creates an economic pressure to join something that may not address their needs in retirement. This also ties back into the opportunity cost that members will face if compelled into a CDC wrapper.
Although members may have the opportunity to transfer out, this will not make up for the potential impact from the lost opportunity cost or solve the issue of having spent years in an investment structure that the member would not have chosen. There is also a risk that CDC transfers could become more complex over time, particularly if regulators become concerned about members giving up a target income-for-life benefit. If advice requirements or additional safeguards are introduced, transfer-out may become less practical than it appears.
Conclusion
In reality, there needs to be two paths available when looking at a potential CDC future to maintain choice for members. The default CDC path and the active DC path, which does not impact the contribution amounts that the members will receive. Without this we are sacrificing the minority for the ‘greater good’ and placing a burden on the employer when making a choice which may have a drastic long-term impact on someone’s future.
The engaged pension member may be a minority, but their needs should be considered. There are a multitude of needs when it comes to both accumulation and decumulation with CDC being great in some cases, but care should be taken in making someone choose a route due to economic pressure.
Pension freedoms have added in complexity but innovation for the majority should not be done at the expense of the minority. The ethical test for CDC is whether an active member can reject the collective wrapper without being financially penalised. If not, then CDC is a restriction on pension freedom without members being given a non-penalised alternative.
This is a beautiful explanation of the change that has occurred over the past fifty years from a means of providing a wage in retirement to a financial product providing us with a product. Thanks Daniela Silcock
Daniela Silcock
Director, Daniela Silcock Pensions Research
July 27, 2026
Workplace pensions were originally developed as an employee benefit, i.e. deferred salary to support those who could no longer work. However, without changing their essential role, they have changed in conception over the past few decades into a financial product, rather than part of an employment package. My sense is that this erodes both a collective sense of ownership and the leverage we as members have to demand genuine representation in decision making.
These changes weren’t deliberate; like most pension changes, they resulted from a combination of policy and market changes. Workplace pensions developed across the public and private sectors during the 1900s. As trade unions grew in influence, they negotiated over pensions alongside wages and working conditions. Many schemes were run by trustee boards attached to an employer, and employees gained formal rights to nominate some of the trustees.
Over the past few decades, the connection between employees, employers, and pensions has weakened. As DB schemes closed and DC provision became more common, the promise of deferred pay became an individual pot.
Employers increasingly began to source pensions from external providers, while automatic enrolment resulted in most active members saving into schemes run by a company separate from their employer. Pension management became focused on investment performance, charges, and customer service. The pension remains funded through employment, but its management has become a financial service purchased by the employer.
At the same time, the weakening of the connection between trade unions and pensions means that many members no longer have a large, organised body lobbying on their behalf. Members are now treated as customers rather than as employees with a collective interest in their deferred pay. That framing has made it easier to accept the idea that multi-employer schemes can manage the deferred pay of millions of employees without being required to give them formal board representation. Customers are expected to choose between products; employees would expect a voice in how part of their remuneration is managed.
Nothing fundamental has changed: a workplace pension is still deferred pay, funded by the employer. What has changed is how it is governed and the language used to describe it. The shift has gradually recast pensions as financial products. This has happened through the growing distance between pension saving and the workplace that generates it. Employees remain the owners of the money, but have lost much of their collective influence over the system managing it.
I’m pleased to hear that LCP pension clients are keen on providing good outcomes for their members, though I’m not surprised, that’s what they are paid to do!
Professional Pension people know that pension outcomes are better using CDC than DC. They also know that those not confident in taking decisions about turning their pots to pensions would rather have decisions taken for them.
I suspect that CDC is a little too “easy” a win for many consultants for whom complexity is rather more lucrative.
Professional Pensions can report
The biggest attraction of collective defined contribution (CDC) pensions is the potential to improve member outcomes and the retirement experience without increasing employer pension spend, an LCP survey has found.
The poll, conducted during the consultancy’s CDC webinar on 21 July, found that 30% of respondents were most excited by CDC’s ability to significantly improve retirement outcomes for an existing pension spend, while a further 26% highlighted its potential to improve the retirement experience for DC savers.
No noise from CDC providers?
But the Professional Pensions article does not report a second poll on the day which asked
The truth is that there is no budget for advertising a product which has yet to be authorised by potential proprietors and the trustees who run their CDC schemes.
I say this as I am a potential proprietor and there is substantial effort and cost in getting an UMES CDC scheme authorised. The door opens for authorisation but the cost of submitting the application is £77,000 upfront, the timeframe for authorisation is 6 months and the final version of what authorised proprietors and trustees can say about their scheme has yet to be published (we expect Friday this week or Monday next to get the final version of the CDC code).
As if the job of those “starting up” a CDC scheme was not hard enough. They are already in competition with DC master trusts who do have the advertising budget and can promote their idea of Guided Retirement Paths (aka “flex and fix” deferred annuities) and Retirement CDC – neither of which will be ready till midway through 2029.
It is in the interest not just for consultants but more critically DC workplace pension providers to encourage deferral of any decisions, no matter how obvious the advantages in terms of 1) member outcomes and 2) the retirement experience.
Fortunately for members, the people taking decisions about workplace pensions going forward appear to be C-Suite. CFOs , HRDs and even CEOs of large companies are taking interest in their pensions now that investment in British private industry from pensions looks imminent.
It is no longer the Pension Manager and the consultant who are all powerful in these matters. Just as with the use of DB surplus, investment into CDC looks much better for those running private companies than the de-risking they’ve had to pursue for two decades.
It is C-suite providers who see value for their money from pensions in the simple terms outline in the headline above and reinforced in the surveys conducted by LCP. Despite the huge amount of advertising from DC schemes for deferral of decisions, large employers want to get on with improving their pensions and so do their unions.
We’ll see a radical change in decision making on workplace pensions in the next year. Consultants must accept a change in employer’s priorities. CDC workplace pensions are simple for employees, provide better pensions and will be up and running this time next year.
A consortium of some of the UK’s largest pension providers has agreed to “explore” the creation of a new fund to back the most promising British private companies.
The proposals for a so-called UK Scale-up Fund are backed by several pension managers including Railpen, which manages £34 billion in assets and oversees railways pension schemes, Nest, the government’s workplace pension scheme, and Border to Coast, one of the largest pension pools in the UK, responsible for around £120 billion of assets.
The new fund is expected to manage more than £1 billion, and the government said it would be of
“sufficient scale to target the best opportunities born out of UK innovation in science and technology”.
Here’s Pension Minister Torsten Bell tweeting yesterday
More than an idea from a junior minister, this comes from the Prime Minister
“By bringing together major pension investors, the UK Scale-up Fund would help connect institutional capital with the companies, founders and venture managers driving the next wave of British innovation,”
Andy Burnham said the scheme would
“help unlock good growth in every postcode, connecting pension investment with the entrepreneurs and technologies that will reindustrialise Britain and create the jobs of the future”.
The British Business Bank, the government’s economic development agency, is working alongside the pension providers to support the launch of the fund and with the intention of investing in partnership with the consortium.
Talks on the fund are understood to be at an early stage and no details are yet available on the fund’s mandate or structure. The talks come in the context of concerns that progress has been too slow on getting pension funds to back British companies after a contentious government push for them to do so.
There are also concerns that UK markets are not attractive enough to retain the highest quality companies. The government wants more UK pension money to be used to support domestic growth.
There have been reports that the Business Growth Fund, Britain’s most active equity investor in private companies, had delayed a £500 million fundraise because of purported reticence from British pension funds.
Andy Gregory, the chief executive of the BGF, said “progress had been modest” on the Mansion House Accords, under which pension funds agreed to invest 5 per cent of their assets in UK private companies by 2030.
Supporters of encouraging more pension investment in UK assets point out that the schemes have huge tax advantages, financed by UK taxpayers, and that the policy could help promising British companies to have a greater economic impact as well as funding infrastructure and housebuilding projects.
Sceptics have warned that directing pension money towards assets based on political aims may produce lower returns and therefore provide smaller pensions, or cost corporate sponsors more money.
Of the new fund, the government said it would
“seek to deliver strong long-term returns for pension providers and their members by investing in successful UK companies. By helping innovative businesses scale up, commercialise new technologies and create skilled jobs, it would support economic growth while helping pension savers benefit from larger retirement pots and stronger local economies.”
Will it get it right this time?
We’ve heard too much from recent governments on new funds. We’ve not seen enough investment from pensions. Nest and Border to Coast are exceptions, they are supported by Government and taxpayer. Commercial funds must feel it a no-brainer to invest for long term growth.
Let’s hope we’ll get it right this time. I fear we’ll only achieve the targets for investment with fiscal intervention from John Healey. De-risking pensions for two decades hasn’t done Britain much good.
Sid – forty years ago – we directly hold less shares than we did in his day
Households in different countries have vastly different exposure to public markets. Among our sample of developed economies, the US leads the pack, with 46 per cent of household financial assets held directly in listed equities and investment funds. Across the EU27, the average is 16 per cent.
The Netherlands, birthplace of the modern stock market, does not even manage half the EU average, at just 6 per cent. The reasons include tax policy, financial culture and, above all, pension system design.
When pension entitlements are included, Australia and the Netherlands — both with large funded retirement systems — shoot up the ranking to above 50 per cent of household financial assets. By contrast, countries with more pay-as-you-go pension systems, such as France, Italy and Spain, see much smaller changes.
In the UK, low stock market participation has been a source of periodic hand-wringing. Attempts to foster a shareholding culture have not halted the slide towards historically low levels of direct stock ownership. This becomes an economic policy issue when too much household saving sits in cash and low-yield accounts rather than being channelled towards productive investment.
Policymakers also care because of the wealth effect. When households have a visible stake in market returns, rising valuations can make them feel richer and more willing to spend. The effect is likely stronger for directly held, liquid assets than for locked-up pension wealth, but broad market participation can still help support consumption.
In a big stock market correction, of course, the wealth effect works in reverse.
Burnham urged to tap up £150bn council pension surplus to boost local economies
The £550 billion Local Government Pension Scheme (LGPS) for England and Wales is awash with cash, meaning it has more than enough money to pay the pensions of its seven million members now and in the future.
They and their employers, who include local councils and thousands of sponsoring firms, paid in more than £13 billion into the scheme in the 2024-25 financial year, the latest figures show.
It is estimated that nearly £1 in every £4 of council tax goes into the coffers of the LGPS. There are two views of the LGPS’ surplus, both of which I respect.
Here is Ros Altmann speaking before Andy Burnham became Prime Minister. She is backed up by John Clancy who has featured on this blog before, focussing on the squalid state of Birmingham when its section of the Local Government Pension Scheme was overfunded.
Ros Altmann, who served as Pensions Minister in the Conservative government under David Cameron, wants these contributions to be paused and the money used instead to improve local services such as social care, libraries, further education colleges or bin collections.
‘It’s a scandal,’ she told The Financial Mail on Sunday. ‘Local authorities can’t fill potholes but they are paying huge sums into pension funds that don’t need the money. I find it staggering that more councils aren’t saying this is bonkers.’
Her views are echoed by former Birmingham city council leader and public pensions expert John Clancy.
He highlights the case of the Greater Manchester Pension Fund (GMPF), the largest in the LGPS with assets of £33 billion, which is run by close Labour Party allies of Burnham, pictured inset, on Tameside council.
The GMPF has amassed a near-£11billion surplus, according to a draft set of accounts for 2025-26 seen by The Financial Mail on Sunday.
Ultimately this surplus ‘belongs to the taxpayer’, said Clancy, who reckons the region’s 2.3 million adults are ‘owed’ almost £5,000 each.
Iain Clacher’s view of caution
Iain and Con Keating have contributed to this blog for many years and coined the term “ephemeral” as a word of caution for those who want today the money in what seem surpluses. Here is Iain urging caution. Pension payment ‘holidays’ are controversial and the legal status of surpluses is unclear.
‘It is an easy win to try and unlock these surpluses at a time when interest rates are high and schemes are well funded,’ said Professor Iain Clacher of Leeds University Business School.
‘But it needs very careful consideration and a full understanding of the costs, benefits and risks of doing so,’ he added
My contribution to this debate.
I’m not quite sure why this blog went viral but I’m told it has got over 100,000 reads. It calls on Andy Burnham to take a radical position on pensions and social care.
You can decide whether the stripping of LGPS surpluses is the radical position he could adopt.
