When having a baby , short-changes women’s pensions – illegally.

Posted on February 16, 2026 by henry tapper

I’m really glad that I found Felicia and this conversation on her linked in feed. She has joined Pension PlayPen and I was not gracious enough to get connected. I’ve read this thread and realise my mistake – this is a link to the post below.

Women are getting short-changed on pensions when they are off work to have a baby. Felicia Flinders explains how and wonders why.

These are the comments that follow, telling you that there are people outside the pension bubble who do give a damn for women’s pensions!

I am pleased to find people like Felecia, they are rare souls and they are not nurtured within the financial services community.

We care “in abstract” for the pensions of women and ignore the practicalities of funding women’s pensions. If there are people in HR and Finance reading this who change their policy towards women on maternity then Felecia will have done good with this post.

This is the proper use of social media and space on social media. If Felecia wants to send her thoughts to me, she will – as Gareth Morgan does – get prime place!

I hope that the matter bought up on Felicia Flinders’ thread, get’s wider publicity than it’s had so far!

 

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Canadian retirement challenges seem rather like the UK’s!

Posted on February 16, 2026 by henry tapper

We in Britain are asking the same thing as Roman Kosarenko in Canada. It is one thing to have saved a lot of money, another have the security in later years of a reasonable income.

All countries who abandon some form of compulsory annuitisation or compulsory drawdown in whole or part inevitably struggle with turning DC pots to reliable income in retirement.

Where is Canada different from us?
For earnings up to around average (and a bit more in future) they have a sort of funded SERPS (CPP/QPP) on top of basic pension which leads to a higher State Pension overall.

When they looked at “adequacy” most recently, they opted to EXPAND CPP/QPP as DC wasn’t deemed as “good” for up to average incomes.
We instead opted for a sort of Pensions Exit.  “Prexit” if you like.

This from Linked in explains how the Canadians wrestle with the same problems we do.

 

Getting Clarity on Canadian Retirement Challenges

Roman Kosarenko

Roman Kosarenko

Senior Director, Pension Investments at Loblaw Companies Limited

The image below is an ancient impact crater as seen from the Earth’s orbit on a clear day. The circular crater was filled with water after a hydro dam was built in Quebec in the 1960s. It is visible from space with the naked eye. It is a beautiful, iconic image of human ingenuity. It seems fitting for the topic of gaining clarity on a complex subject, such as the challenge of making Canadian defined contribution plans fulfil their promise of retirement income.

If one gains some elevation, on a clear day free from distraction, one can see the problem for what it is. Canadians with defined contribution assets don’t have good options for converting accumulated balances into retirement income. This is getting more acute with every passing year because more and more Canadians only know DC retirement savings. Defined benefit plans are going extinct in the private sector, and the public sector remains the last stronghold for DB plans, sometimes raising the feelings of us-vs-them, haves-vs-havenots. As a side note, most of the pension envy is related to the level of benefit, not the type of benefit, although the two are related to some degree.

What do I mean by a “good option”? It is simply the option that does not run out of money before death and generates a reasonable level of retirement income. Reasonable here is in relation to the person’s lifetime sacrifices of retirement savings.

If I put an investment hat on, that mysterious good option becomes good if it is provided by an entity that is an efficient investment structure that is able to pool longevity risk.

Achieving an efficient investment structure can be distilled to a few essential components. It should be large enough for economies of scale, it should have access to a wide range of investment instruments, and it should be professionally governed. Good governance is often associated with a fiduciary duty, but I would argue that a combination of scale, professionalism and good regulation can achieve just as good results when it comes to investment efficiency.

There are of course good examples of efficient investment structures in Canadian retirement industry. That part is fairly well understood both in Canada and abroad. What we refer to as the “Canadian pension model” is largely that.

Now, let’s turn to the other essential component, the ability to pool longevity risk. In Canada, there are three types of providers who could foot the bill:

  • Life insurance companies (both stock and mutual) and fraternal benefit societies. They are generally not very efficient, i.e. not providing a sufficiently high income in retirement, due to structural factors, such as capital requirements effectively prohibiting any equity exposure in the liability hedging portfolios, profit margins and an outdated distribution system for annuities.
  • Pension plans pool longevity as well – defined benefit, target benefit, or else defined contribution plans with a variable life benefit (VPLA) component. Pension plans are limited in their ability to accept registered money from prior employment via the service buy-back process. Furthermore, registered pension plan in the private sector are being displaced with DC-like arrangements with more flexible withdrawal provision and less onerous regulation, such as Group RRSPs.
  • PRPP or VRSP provider with a built-in variable life income components (VPLA) is also able to pool longevity risk. Those structures don’t exist yet, even though tax regulations permitted them since 2017. Quebec is the first Canadian jurisdiction to permit VPLA within VRSP as of January 1, 2026.

I have argued for a long time, and I will repeat it again here: a VPLA (also known as a dynamic pension pool) inside a PRPP or VRSP shell is the best route for providing reasonably high retirement income that does not run out of money before death. This is because PRPP or VRSP is already permitted to accept all tax-deferred registered money – from registered pension plans, from DPSPs, from RRSPs – and it has no regulatory restrictions related to past service. In effect, any Canadian with a tax-deferred retirement savings balance should be able to transfer it to such a plan.

What is more encouraging is that the Quebec version (VRSP) permits individual membership. There is no need for a pre-existing employment link between you and your employer who is a participating employer of the VRSP. You can individually apply for VRSP membership and then transfer the balance. This is similar to how the Saskatchewan Pension Plan operates, and Canadian policymakers should take heed and replicate this approach as much as possible.

Why is individual membership important? This is because achieving investment efficiency requires a sufficient scale. There is currently over $1 trillion of RRSP balances in Canada [1]. Without individual membership, that huge pile of money will continue to sit there and bleed assets through high fees and being unable to pool longevity risk to provide lifetime retirement income.

PRPPs and VRSPs were originally designed to be cost-efficient accumulation vehicles. That was a Faustian bargain, where the providers agreed to price caps in exchange for a limited safe harbour protection with respect to potential claims of breaches of fiduciary duty. Unfortunately, the policymakers naively assumed that they can put price caps before the scale is achieved. In economic reality, scale is a cause of low fees, not a result of it. Scale can be achieved by mandatory participation, like was done in the Australian superannuation system. And over there, both for-profit and non-profit super trusts achieved low cost over time due to scale, not the other way around.

Why is Quebec getting ahead in this process? This is because the pension business lies at the intersection of finance and employment, and both need to pull in the same direction. In Quebec, both employment law and securities law are governed by the same government. If that government decides that something needs to be done, it can be implemented without the responsible parties washing their hands or pointing fingers at each other.

The PRPP suffers from an EU-like problem of decision-making. PRPP is administered by a federal regulator (OSFI), but the provinces participating in the PRPP regime have effective veto power on any important changes. Every province has its own employment law, and every province has its own securities law. Harmonization of securities laws achieved some success, but policy objectives still differ from place to place.

The painfully slow adoption of the PRPP framework across the country is a symptom of this issue. Back in 2014-2015, many provinces were concerned about the economic impact of creating a “new tax” if the PRPP were to have a minimum contribution standard. In Alberta, the Act was introduced in 2013, adopted in 2017, but never proclaimed into force.

So what can be done about all this? The pension policymakers across Canada should look at what Quebec is doing about VRSPs and try replicating it. It may be difficult to get everyone agree to anything, but there are things that would be very helpful.

It would be very helpful if decumulation-only PRPPs were permitted. Such a PRPP would only deal with balances already accumulated, and it would not stand in the way of any province’s employment or economic agenda. A decumulation-only PRPP may gain scale much quicker than an accumulation PRPP. This amendment can be done at a federal level and would not be subject to provincial veto.

It would also be helpful if policymakers realize that scale comes before low fees. As such, they need to focus on facilitating asset consolidation in the DC space. I would recommend not repeating the mistakes of the Ontario’s Wynne government and their approach to pension consolidation. This is a business problem, and it can’t be solved by forcing existing large plans to load on outside pension assets.

Asset consolidation in the DC space is different. DC can be and should be efficient on its own, not by forcing a round peg into a square hole (DC into DB).

*******************

[1] There are no published stats about the total size of RRSP system. It was reported that the number of contributors to RRSP accounts (who claimed tax deduction) was 6.2 million in 2022, and that the average account balance was $144,000 (although self-directed accounts may have been excluded).

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AI is punk rock for the teenagers.

Posted on February 16, 2026 by henry tapper

Why is the headline below no surprise?

Being at the other end of the educational pipeline, I am trying to imagine what it must be like entering white-collar work and learning what AI can do (and you can’t do nearly as well).

If I wanted to know what was happening in the business world , I could open my digital paper and find that  AI systems such as Grok are a threat

But I find that I can find AI to be agents taking over the expensive software that my firm is paying for (to SaaS suppliers).

Meanwhile in other countries there are attempts to pull up the drawbridge, presumably with the enemy already in the castle

The Monday morning paper I am digitally flicking through is a series of articles about Artificial Intelligence, mostly about how to put a lid on a boiling pot.

The circularity of control

It’s all a little circular as the loopholes in the legislature to stop AI taking control are themselves identified by artificial intelligence.

I remember writing a 5,000 word report in 1983 on Ezra Pound by hand, only to find a girlfriend had done her economic thesis on a computer she had discovered could be hired from her department.

The computers of the 1980s were very different from the computers we use today. They were  large, bulky, and expensive. However, they were also groundbreaking machines that paved the way for the computers we use today.

But like AI they were the door openers to the smart kids who got ahead , that girl went on to be CFO of BGI and now runs a business that started out selling the blockchain and now is at the forefront of AI in California. Does this CV surprise me?

Two ways forward for young people

There is likely to be a lack of opportunities for young people who do not work with AI to get where they need to be. Like the guys who wrote their thesis’ and then had them typed on an electronic typewriter when computers were available (in the early 1980s).

For my generation to now argue that AI is a threat to young people is a failure in imagination.

Undoubtedly there will be law breaking and casualties from the changes that AI will have on those who work with software. But to suppose that AI will not impact those who interact with software no further than through apps on their phones and have no input into what is changing, AI will be just as radical to lifestyle.

For my generation, it may be grandchildren who we worry about , maybe a generation further,  there is no stopping the radical changes that will be available to them. They are the generation that can teach us the opportunities and we have only the morality we have inherited from generations before us!

AI is the imagination of the future, for young people. It may be frightening to us older folk but it is the punk rock of those under 20. We ought to remember and be glad.

 

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The dreary work of the white-collars will be done by AI – what’s wrong with that?

Posted on February 16, 2026 by henry tapper

I am pleased to hear that the dreary work of white-collar staff is going to be taken from them by software.

If a blog of podcast can be better written or delivered by software already on my computer but upgraded to answer my questions- good!

What I am asking that can be answered could and should be almost everything about money, what that leaves me is the delight of knowing how I can live my life and what I can do with the time that I have been handed back.

And what it will do is to winnow out the value of the financial services we pay for so that we get value for 0ur money. This includes advice.

Thanks to Emma Dunkley, Mary McDougall and Emily Herbert for this.

Shares in the UK’s largest wealth managers tumbled on Wednesday over concerns about potential disruption from a new AI-led investment tool.  St James’s Place, Britain’s biggest wealth group, fell more than 13 per cent after US-based wealth management platform Altruist launched a tool to help financial advisers personalise clients’ investment strategies.

Collegia for growth

And to suppose workplace pensions aren’t to benefit is churlish. I work closely with a workplace pension run by Collegia that has built up 5,000 young businesses that it has built a payroll for and which comply with the workplace pension regulations using software almost totally through artificial intelligence. 50,000 people are building up pots for the future and their companies have outsourced the problem of retirement provision to software.

To suppose that this level of automation cannot become the normal in terms of interfaces between pension schemes and employer and their staff is ludicrous. The future is with firms like Collegia and with other new players who put technology at the beginning, middle and end of processes. I think of Lumera who are taking over work begun by ITM and delivering success in Europe and now the UK.

These are organisations that are not hidebound to the past but open to the kind of future that Mustafa Suleyman plots.

I am one of more than 500,000 people who follow him, because he built DeepMind and now is building Microsoft AI.

To suppose that I would not want to follow the path he is creating is ludicrous and to imagine a pension system by 2030 that is not aspiring to the future that Collegia, Lumera and others are uncovering today, is short-sighted in the least.

I have written recently about the FCA’s wish to help those offering products built to deliver using AI. It is right that regulators review what they are doing to take into account a new world that is not about to arrive but is already here. This includes the Pensions Regulator.

There are of course parts of what we do that cannot yet be outsourced to the software that we already use. But why be the Luddites of the mid 21st century and deny machines the opportunity to take away our dreary work?

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Pensions Oldies speak out on CDC

Posted on February 15, 2026 by henry tapper

I am pleased , when looking for this blog’s comments, to find some brilliant comments by Pensions Oldie and Peter Cameron – Brown and Derek Scott. The older commentators that this blog has, are very special to it. Here is Pensions Oldie speaking out on CDC

 

Perhaps we should consider a role for unions and trade and professional bodies here.

It appears the logical conduit for employees of multiple employers, particularly small employers and the self employed, to obtain the benefit of CDC. It is also the model followed in may other countries, Australia, Holland and Canada spring to mind.

This would tend towards the non sectionalised TPT model and, although it may seem heretical in this respect, can we think of the Church of England as a trade body!

For the employer – there would be no difference between CDC and DC, except perhaps a commitment to an industry standard contribution rate.

If an employee could insist on a CDC contribution as part of the employment contract terms it would remove the small pots and pension transfer problems overnight.

I quite agree that unions should be a part of the conversation about CDC and they have been advocates for it to date. That said, they have a brief to preserve what is left of DB. My hope is that they will lobby for the distribution of the surpluses that it’s estimated 75% of DB pension schemes have. I hope that surplus will be used to make CDC as good for future pensioners as the DB scheme has been. It need not be a menace to the sponsoring employer.

The unions are having a pensions conference as they do each March and this one will be on March 5th,

I am pleased to have been asked to a meeting of union folk at the end of April to talk with Terry Pullinger on how a Pensions Mutual can be used to offer CDC to all kinds of employers.

I do not think that a large employer should not be prevented from having their own sections but as it costs £77,000 as an authorisation cost to be paid to TPR, I would not expect many employers to have their own section. I think it will be more sensible for employers with experience of pensions to participate in a mutual than take on responsibility for a CDC scheme within their DB schemes – but that is a good conversation to have. I am happy to see CDC delivered whatever the way.

TPT have their own way forward and I wish it well. It is vital for CDC that there are several options open to employers offering different ways to participate.

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Do you really think CDC folk haven’t thought through unfairness?

Posted on February 15, 2026 by henry tapper

I don’t trust this headline; it repeats an unfair criticism of UMES “whole of life” CDC, confusing it with the kind of CDC Royal Mail are using.  This is not to criticise the Royal Mail CDC which works brilliantly . The Royal Mail CDC scheme works for Royal Mail staff who stay in one scheme all of their lives Their a single contribution rate works as it does for DB schemes, the young overpay to begin with but get a good deal out of later life contributions. That’s right for Royal Mail but not for multi-employer schemes where a more dynamic approach to pricing is required. I will come to this in a moment but first let me deal with John’s “praise” of CDC.

John is Damning with weak praise

Through pooling of longevity risk, and adopting a higher return-seeking investment strategy, CDC can offer a higher expected income for life than alternative approaches.

John’s praise for CDC is that it takes investment risk  and pools longevity risk . This praise sets CDC up for criticism.

CDC can go for growth without taking investment risk. Over time a long term investment strategy will outperform liability driven investments which cannot target growth. Anything that targets annuity buy out has not got the infinite investment horizon of an open collective scheme. Let’s remember the problem of closed pension schemes

As for pooling of longevity, less is deducted when insurance or reinsurance is not in place but the pooling only works well if there is scale so CDC is a scheme that works so long as it is popular. If it can be strangled at birth, a CDC scheme can never prove that it will work and that is what has happened since it was introduced in 2014 by Steve Webb and discussed by Derek Benstead (the author of the above picture) since the days of stakeholder pensions.

A more cogent criticism  of CDC is that it swaps flexibility and choice for – well – a pension.

We have been seeing transfers from pensions to pots since the late 1980s and moving money from pots to pensions has not been popular with employers , advisers or with DC workplace schemes.

These are the rabbit punches to soften the reader up . CDC can give us up to 60% more than what your DC pot will show you on your pension dashboard but that’s meaningless because UK UMES CDC just doesn’t stack up as L&G are keen to tell us

CDC schemes share similarities with defined benefit (DB) schemes, but don’t receive deficit contributions from sponsors. Unlike Dutch CDC schemes, UK CDC schemes also can’t use buffers – liabilities must always match assets. As such, benefits must be adjusted regularly to maintain balance.

As my friend Derek Benstead reminds me, CDC’s pricing will always be out because assets and liabilities will only tally coincidentally and then but for a moment! There’s no buffer as insurers hold when operating  with-profits and trustees hold to guarantee defined benefits And there’s no safety belt like the PPF provides DB or FSMS provides annuities.

But worst of all – here’s something you didn’t know, I didn’t know and the people who are working on  “dynamic pricing” for  multi-employer schemes can’t possibly know because they are not one of Britain’s largest insurers (hmm)

The “something” (according to John’s article) is that CDC is vulnerable to falls in the markets its funds are invested in.

How benefits are adjusted matters. For example, if scheme assets fall by 18% relative to liabilities, overall benefits must be reduced by the same proportion, but there are different ways this can be achieved. There are two main approaches:

  • Scaling approach: All expected benefits payments are cut by 18%, with no change to the indexation rate of the scheme (the rate pensions are increased each year).

  • Indexation approach: The rate of benefit increases (indexation) is reduced. For a scheme with a 20-year duration, reducing indexation from 3% to 2% per year results in an overall liability reduction of 18%. The impacts are much greater for longer-dated cashflows as you can see below:

The reason nobody knows this is because it isn’t true. A scheme may see its assets fall 18% in a year but it does not have to pay 18% less either in a cut in benefits for a year or  through 18 years of lower increases.

That’s because the scheme will have an expected growth rate that will anticipate a year or two of horrible returns as well as a year or two of huge returns. Let’s say the average return expected is 8%, they will have to get back the 18% plus the 8% positive return which never happened. There will have to be somewhere in the future, something wonderful like mid twenties returns. But we do get market returns that high, just as we do get market falls that dismal.

This is what happens if you don’t get the bounce, which is never!

What goes down, goes up!

To suppose that people will be down 25% for one year’s market fall of 18% is fine if we are talking a single payment, but that’s not what happens when saving into a UMES CDC pensions, they get this bad news balanced with good news in better years  and overall people will get target increases (typically inflation linked) every year.

They may get more or less pension for their money if there is surplus fund from outperformance and less pension for their contribution when the scheme is behind on funding and it will very badly be accurately balanced. But this form of dynamic pricing is what is going to be available for multi-employer pension schemes and certain occupations like bus drivers, religious workers and those who work in housing associations may find themselves in a CDC pension that allows them to move from one employer to another while staying in the same sort of work.

As for the assumption that they will be caught out by contributing in a year where money goes down 18%, they can feel happy that money goes down but it also goes up and pounds cost averaging applies! As long as the average return is close to the assumptions made by the scheme, the benefits will be as projected, even if there are some rocky years mingled in with the good.

Is the youngster discriminated against?

John Southall repeats the arguments made against Royal Mail’s CDC scheme

The chart illustrates the greater downside risk for younger members. They also have more upside risk, but it isn’t the case that “more downside is OK because there is more upside”. If members are exposed to more investment risk, they ideally should be rewarded with a commensurately higher investment risk premium.

In a CDC scheme, everybody is in the same fund (a collective fund) and there is not more upside for the young than the old.  This is DC thinking where individuals face there final years on their own (not collectively). When young, members of a CDC scheme get a lot of pension for their contribution and as they get close to retirement they get less pension. This takes into account the investment they are making of their money which they lose for a lot longer as a youngster. It is not a question of rewarding people with an investment return any more than it is right to make people pay for a bad year’s return on the fund.

In John Southall’s article, the first of his four remedies to set CDC right is “(1) Time is Money”. This is already being considered by actuaries using dynamic pricing and this is a development for multi-employer schemes.

The second point “(2) Investment risk transfer” is one for me to hand to actuaries to chew over but I take the difference between scale and increase to be the price conversion (scale) and the revaluation of the promise (increase) and this simply gives the scheme actuary the opportunity to dynamically adjust the amount of pensions that will pay to each member depending on their time in the scheme and the market conditions they’ve experienced. Of course it won’t be 100% fair (like a scheme not being 100% balanced – surplus v deficit) but it should be fair enough.

The third point is that CDC works when new members join and it is not closed to youngsters. There is a lot in the CDC code about “continuity” and what happens if the closure of the scheme is triggered. Basically the scheme can merge with an open one, put a problem right or in the worst case – wind up.  I do not see CDC schemes setting out to fail , but nor do I think that no CDC will fail. If some master trusts have had to merge, then so will CDCs, most will choose to merge just as most DC master trusts which have been consolidated chose to be consolidated. Why should CDC close en masse? Why should CDC pensioners have a new proprietor? Why should the regulator allow a CDC scheme to get into trouble that it could not get out of?

The fourth and final point raised by John Southall is that trust needs to be built for the future. To be honest, I think that most of the lack of trust in CDC has been created by the ABI, which L&G rejoined last week.

CDC schemes offer attractive features, but their long-term success may depend on whether intergenerational fairness is treated as a core design consideration rather than an afterthought.

To suppose that those who have been working on CDC for over a quarter of a century are not aware of the potential of unfairness is crazy. More time has been devoted to the question of creating fairness than just about anything else. That is because there is so much good to be shared and those who love CDC (I am one) do not want to foul things up by getting fairness wrong.

The UMES route is the least risky for unfairness to occur as time allows the horrors of short term market turbulence to create unfairness. There is work being done on that but right now the work to make UMES whole of life fair, is pretty well done.

My hopes for my pension are linked to L&G!

I have approached L&G to see if they would like to join with a Pensions Mutual I and my colleagues are setting up and they have said “no thank you”. This is not a problem, I am an L&G DC saver and I hope that L&G and me will stay friends, I’d rather a CDC style pension than an annuity or guided retirement with flex and fix into an annuity.  But as a relatively dynamic 64 year old, I have no problem in waiting a couple of years till I am ready to pack it in!

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Technology elevates “administration” to “pension’s ecosystem”.

Posted on February 15, 2026 by henry tapper
Kim Gubler
TPR/DWP
Ross Wilson

Sometimes you pick up a gem from social media that makes you want to shout “yes!” . Thanks to all on this thread that says what needs to be said. “Administration” is an inadequate word for the delivery of pensions to the millions of people who depend on them to release them from work!

To suppose that we can move forward to provide pensions from DB , CDC and DC schemes, means we must take the infrastructure that Ross talks of – seriously.

It is every bit (though not as well paid) as investment management. The KGC white papers which sit on this blog are recognition that PASA is a trade body as important (though not as well funded ) as Pensions UK, certainly in delivering the new pensions that will arise from the Pension Schemes Act and the CDC conduct code (both delivered shortly).

Thanks to Ross Wilson and Kim Gubler for bringing this post to my attention. We are of course in a world that is changing very fast as technology takes a grip and what seemed impossible to achieve in years can be done almost overnight.

AI is empowering what we once called administration to deliver what we need in a humbling short time and it is those with a firm understanding of what needs to be delivered to people as pensions who we need to listen to.

The AI headlines will bring headaches to organisations who put up shutters against the wind of change. It could hurt advisers , software suppliers and those who manage administration. But administrators that embrace technology with a sigh of relief will win.

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Can VFM measurement be more than a masterpiece of dross?

Posted on February 15, 2026 by henry tapper

I got an email last night from a Peer of the realm and realised that the idea of value for money that people have is so various that after nearly 150 sessions, the VFM podcast has not been able to pin it down. Here’s the key section of the email that woke up in my head

Transparency is a great thing, but I wondered if you and the good folk in the industry felt it was headed in the right direction. I wasn’t sure. It seems we are not going to see transaction costs or any other hidden costs any longer. Historic performance is to be based on arithmetic averages which flatters, I think, relative to any external comparison.  I have not yet found and mention of stewardship as an important service forming part of value for money.

It is very true that the concept of value for money championed by Chris Sier, with whom I started my company has not been taken up by the FCA and TPR in their measurement of what pension schemes get from their investments , nor any mention of stewardship of the assets or the funds that hold those assets.

Chris left me to set up Clear Glass which helps large funds, typically held in LGPS but also in large private DB plans understand what they are paying and whether this is value for money. This is institutional works and what the Government wanted from a VFM measure was for employers and ultimately for members of the employer’s workplace pensions.

My correspondent is right in his estimation of the FCA and TPR work which we are being asked to consult on. It is, to use a phrase of Robin Ellison ” a masterpiece of dross” as it allows those who measure performance sway, while those who want to know whether they did better , worse or average returns on money sent to pensions, get very little.

What institutional funds get from Clear Glass is a value for money report for their purposes, but what TPR and FCA will produce for employers and members will not give them either the transparency that ClearGlass discovers or the AgeWage scores based on data from schemes of money in and money out. It is a “flagship of absurdity” (another Ellison phrase).

Clearglass and AgeWage are two companies that offer VFM for institutional pension schemes and end users of pension saving schemes. Both do so by using data and not “arithmetic averages which flatter“. The VFM question is based on returns from investments and not about the pensions that are bought by the investments.

Clearglass’ work looks at the amount that is taken out by funds from the asset performance and returned to the pension scheme trustee (or to the LGPS via pools).

AgeWage’s work looks more at what members actually get from their contributions and its numbers include the costs of investment administration as well as what’s paid for the various services paid by the trustees or GPP managers at the expense of the member’s pot.

When it comes to the future, members will not just be interested in pots but guided retirement outcomes (including CDC pensions). What members will be interested may not be how their pots have grown but the rate of their retirement income (whether CDC pension, annuity or drawdown).

When the DWP started talking about VFM at the start of this decade, it was no closer to pinning it down than it is today. Is it a transparency measure of costs paid  created by Clearglass or is it a transparency measure of returns achieved by members, as measured by AgeWage.

In truth, the answer is neither. It will be meaningless and useless in the future , just as the numbers which are produced for VFM are not understood or used. My correspondent wanted to know how to respond to the consultation on VFM, I can only suggest he listen to the last four VFM podcasts as it will tell him what this blog tells him. There is no clarity of  purpose for the VFM project and no love for VFM (other than from mathematicians).

Measuring the cost of funds will continue to be the business of Clearglass while the benchmarked  measurement of people’s returns will be AgeWage’s business. They are the most transparent ways of doing two different things. The market has moved on in the past 8 years since Chris Sier and I set out on our joint task. Chris has since died and I speak for him (badly). I am neurologically damaged but carry on, thinking now about how Chris’ work can be useful for CDC funds and how AgeWage can can measure the pensions (rather than pots) that people get from their contributions.

Both Chris and I confined ourselves to measurement of data since it was objective and undeniable. Neither Clearglass or AgeWage reports have been challenged for what they do for that reason.

But they do not measure the effectiveness of investment through an ESG lens, they do not measure stewardship in other ways. They do not measure the help savers get with their pots nor how pensioners or annuitants are being treated and it most certainly does not measure the use of UFPLS (pension freedom).

So in answer to the question from the Peer, I would quote Robin Ellison. Until we know what VFM is supposed to do, then we should treat the VFM paper of FCA and TPR as a masterpiece of dross and flagship of absurdity.

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Nick “the bushes” Chadha entertains, educates and explains Stagecoach’s pension.

Posted on February 14, 2026 by henry tapper

Nick “the bush” Chadha

I was surprised and pleased to find Nick the Bushes on the VFM podcast this week.

This podcast has taken a turn for the better this year with a string of guests who are prepared to talk about pensions rather than pots. I got a bit of gip from Claire Altman last week for saying she did not sound very comfortable with selling bulk and individual annuities. I am every bit an admirer of her work as a trustee at Smart as of Nick’s work at Stagecoach and I hope that we will find a way forward that doesn’t pitch insurance against pensions as they are today.

I mention this because the Stagecoach pension scheme was heading to insurance buy in/out and passed across the desks of Standard Life’s BPA executive. But the trustees were pretty adamant they wanted to keep going with the £200m surplus being spent on pensioners.

Nick is “the bushes” to everyone and I’ve no idea why, but he’s playing a straight bat as actuary, trustee, scheme secretary and other matters financial on this pod.

It is no surprise that the pod went on for 77 minutes as the Bushes was loquacious and if you follow what happens when a DB pension scheme wants to be innovative, you’re going to want to listen to all 77 minutes. I am going back for a second listen today!

To call the transfer of the Stagecoach DB scheme to Aberdeen and away from Stagecoach PLC “innovative” may be a bit too much for those who run who want to run pension superfunds. To quote one CEO, “you wonder what a superfund is for“.

Nick tells the boys that he is in no doubt that such transfers will be followed by other schemes swapping sponsors. To have followed a  superfund’s labour to get authorised,  makes the sight of an employer collecting DB schemes as Aberdeen has, “surprising“.

This is not good news for insurers either. There are some big targets baked into a lot of insurance companies and having seen off the challenge of the Pension Superfunds, they had thought that they had created in Clara, a bridge to buy-out. But here is a new threat.

This may sound like economic politics but for members it is very personal. Nick the Bush uses this opportunity to explain to the actuaries and actuarially minded what is going on. But there is in this Inverness born, Edinburgh educated and general lad about town style someone you can believe does “town hall” meetings with members.

As for the podcast, it is a fascinating listen and Nico and Darren seem to have turned a corner, now interviewing people who give back everything that they get by way of actuarial and pension expertise. Together with the pods of Kim Gubler and “Red”  Rory Murphy, we have new perspectives on pensions rather than pots and a new view of Value for Money.

Claire Altman argued that VFM was in the eye of the member, but we have seen in all four of these latest podcasts a focus on retirement income. I suspect that value for money is in the eyes of our two hosts , allied with Robin Ellison’s estimation of what the FCA and TPR are offering us on VFM – a ‘flagship of absurdity’.

Listening to the ever polite and friendly  Nick the Bushes  Chadha,  I get the  impression his views on DC (not given) would  tally with Ellison’s estimate of VFM – a “masterpiece of dross”.

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Can we guide different savers to their best retirement?

Posted on February 14, 2026 by henry tapper

Johan Kriek – Canadian but I could be working with me – the way he thinks

It is good to see sensible people looking at guided retirement from workplace pensions. Here is an example

Well I’m grateful for my opinion and from the look of Johan Kriek , I suspect there’s a couple of decades of experience gained (me) and energy retained (Johan).

I have responded in one of the comments his excellent post’s questions.  But let me try again.

State pension is where most people start

When we first decided to have a state pension it was decided that we would all be in it and it would benefit all (in terms of income) the same. We know that many people die in their sixties and some live past their nineties. That is unfair from an investment sense. If those with short life expectancy knew that, they would commute their pension and enjoy it all while alive. But as a nation we have decided not to target different benefits to different people so you get the same however healthy you are, however much national insurance you’ve paid in your qualifying years. So long as you’ve paid NI for 10 years you get something and if you’ve paid 35 years (typically) you get a full entitlement.

For most elderly people (today), the extra pension you got was earnings related. Some people got extra state pension (SERPS), some got extra in their company pension and a few saved for themselves because they didn’t have an employer buying them a pension.

The idea of having a pot of money to convert at retirement into a pension really only became normal with the introduction of auto-enrolment and the closure of employer pension schemes. That was from 2012, we are only really 15 years or so into mass saving but now we are starting to ask questions like Johan. I suspect that a magic solution would arrive 12 years after the announcement of pension freedom but it hasn’t.

Well I can’t pretend that CDC offers people guided retirement outcomes, it doesn’t. It just provides earnings related pensions rather like SERPS and Final Salary and then Career Average Pensions.

This may seem a little bit of cop out but all the above pensions – look at the state pension and take that as the model with no guide but a one pension suits all approach.

All the effort of a collective pension is based on giving everyone a fair share and not getting too hung up by their being losers and winners in terms of shape of benefit (as Johan’s guided income has us fretting).

I’m really sorry that my experience may sound like a lack of energy but I can tell those in their early years that as you get older, you generally want things to get simpler and easier. Which makes a pension a lot more attractive than freedom and financial flexibility. You want to get paid a regular amount into your bank account each month and for it to be a fair share. You accept that when you look at the state pension entitlement and you accept your company pension, because it’s done for you.

I have a lot of money in pots and I have no guide as to how to get at it. I would prefer to have it paid as a pension and know just enough to know that an invested pension is more my cup of tea than a guaranteed (but not investment based) annuity.

I am not sure that most people want to take more complicated decisions than the one that I am facing right now, well – I would be taking if I had an opportunity to get paid by a CDC pension! But maybe there will be one for me to use in a couple of years when I don’t want to work any more!

Can you guide me to the best retirement? Well I’d like one that’s as simple as the state pension and pays me a little more than an annuity does , have you got any suggestions?

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