New evidence suggests that feeding our feathered friends is spreading disease and diminishing numbers. But stopping seems cruel. Thanks to the FT for this
“What Administrator Behaviour Signals” – observations and insights from KGC (pt 3)
This is the third of four articles published using social media By KGC Associates and written by Hayley Mudge. I am reprinting them because I think administration is undervalued and that its value will increase as we move forwards with pensions regulating from the Pension Schemes Bill/Act and the CDC code.
As before, I use the space of the blog to allow you to read the observations and insights of KGC associates
Part 3 – What Administrator Behaviour Signals
Hayley Mudge
Head of Research at KGC Associates | Part of Independent Governance Group
Peer dynamics in a consolidating administration market
For administration providers, consolidation is not an abstract market trend but an operational reality. Changes in ownership, scale and service scope are experienced through migration pipelines, platform decisions, resourcing pressures and evolving delivery models. Peer behaviour such as acquisitions, exits, diversification or strategic pauses, provide valuable signals about where operational pressure is emerging across the market.
In a consolidated environment, administrators do not operate in isolation. They share labour pools, specialist skills, platforms and transition capacity. As a result, strategic decisions taken by one provider can have indirect but material consequences for others, shaping capacity, risk and service resilience beyond organisational boundaries.
Historically, peer activity has often been interpreted through a competitive lens. In the current market, however, peer behaviour is more usefully read as an indicator of operating reality rather than a measure of success. Patterns of consolidation, diversification and exit reflect how firms are responding to cost, complexity, regulatory expectation and the practical limits of delivery capacity.
This section explores what administrator behaviour signals about the underlying health of the administration ecosystem. It considers why pure administration models have become the exception, how different consolidation strategies reveal distinct operational pressures, and why shared capacity constraints mean peer decisions increasingly shape risk for the market as a whole.
Administration is rarely sustained as a standalone proposition
Most firms originating as administration-focused businesses ultimately add advisory or complementary services. This reflects the capital-intensive, low-margin and disruption-prone nature of administration. As a result, many firms have chosen to:
- diversify revenue streams
- cross-subsidise administration investment
- integrate administration within wider consulting or advisory propositions
In 2026, Equiniti and Trafalgar House remain the only pure TPA’s. In 2025 Aptia moved away from standalone administration through its acquisition of Atkin & Co and Railpen was acquired by Broadstone.
KGC insight:
Where peers move towards broader service models, it’s often less about growth ambition and more about sustaining the level of investment and resilience modern administration requires. We believe the survival of pure administration requires exceptional control of cost, process, data and people.
Consolidation strategies reveal where operational pressure sits
When comparing the different strategies, we can see where different internal pressures and risk concentrations lie:
- Scale-led consolidation – these often reflect a drive to spread fixed cost, but raises sustained migration, knowledge-retention and people risk, and short-term service volatility. Scale strategies require highly structured transition discipline, otherwise service risk leaks into the wider market and can potentially damage confidence across providers, not just one firm
- Capability-led acquisitions – these increase technical depth, but can create fragmented operating models if integration is slow or partial. Capability acquisition only works if operating models are deliberately aligned, otherwise, complexity becomes the hidden tax on growth
- Administration embedded within broader service models – these can stabilise investment, but may dilute administration priority if governance is weak
- Exit-driven growth – these create opportunity, but expose receiving firms to inherited data issues and compressed transition timelines
As administrators take on larger, more complex books of business, administration increasingly functions as critical operational infrastructure. As now recognised by TPR.
Repeated acquisitions highlight a recurring challenge – systems can be bought, books can be transferred but operational coherence takes years to embed.
KGC insight:
How peers grow is often the clearest indicator of what they are trying to solve operationally. And as a result where delivery risk is most likely to surface next (migration load, platform complexity, investment prioritisation, or capacity shock).
Consolidation does not remove operational risk, it redistributes it. Each strategy creates a different risk signature, but none are risk-free. The danger lies in failing to align governance, investment and operating controls to the chosen path.
Peer strategies directly affect shared capacity
Administrators operate in a shared ecosystem: the same labour pool, migration specialists and delivery constraints. Across the market, structural change has consistently driven:
- experienced administrators becoming scarcer
- erosion of scheme-specific knowledge
- transition teams becoming a bottleneck
- potential market-wide delivery standards degrading under strain
KGC insight:
Capacity is now a market-level constraint. One provider’s consolidation programme can materially impact another’s ability to deliver BAU and change. Operational resilience is increasingly tied to a firm’s ability to retain and develop experienced administration talent through periods of uncertainty. The resource pool is quickly drying up, administrators are struggling to recruit skilled people from both inside and outside of the industry.
Governance frameworks ignoring people risk are, in our view, incomplete.
Positioning matters more than scale
In our experience firms which appear most resilient are not always the largest, but those who:
- are clear what administration represents within their business
- invest consistently in people, systems and controls
- govern change explicitly rather than absorbing it informally
The fact some firms have remained structurally unchanged over an extended period highlights acquisition is not the only route to resilience.
KGC insight:
In the current market, sustainable performance is increasingly a function of operational governance maturity, particularly around change control, capacity management, data discipline and knowledge retention. Peer behaviour is a map of operational pressure, not a scoreboard of success. Administrators which understand what peer moves signal, and govern their own growth accordingly are often better placed to deliver stability in a consolidated, resource-constrained market.
Reading the signals across the market
Viewed together, administrator behaviour provides insight into how operational pressure is being managed across a consolidating market. Diversification, acquisition, pause or exit are not simply strategic choices. They are responses to the practical realities of delivering administration at scale within constrained capacity, regulatory expectation and evolving member needs.
The diversity of consolidation strategies highlights there is no single operating model guaranteeing resilience. Different approaches distribute risk in different ways, shaping exposure to migration complexity, people retention, operating-model coherence and investment discipline. In this context, peer behaviour is most usefully interpreted as a signal of where pressure sits, rather than as a measure of success or failure.
As administration becomes increasingly embedded within wider service propositions and shared delivery ecosystems, the consequences of individual strategic decisions extend beyond organisational boundaries. Capacity, capability and confidence are no longer self-contained. The ability of the market to absorb change depends as much on collective sequencing and governance as on individual execution.
What distinguishes the more resilient providers is not scale alone, but the extent to which their operating models remain coherent as ownership, scope and delivery environments evolve.
The final article in this series will look at how consolidation affects the industry.
The people are the company, they get the pension surplus , the company still benefits.
I read this tweet and for a moment thought that I was agreeing , but then I read a little further and decided I was not sure…
Did you notice £2.3bn giveaway in Budget to small group of public sector pensioners? Another transfer from young to old.
After years of companies pouring hundreds of billions into DB pensions the companies, not pensioners, should benefit from surpluses. https://t.co/W8dEg3l86C
— Paul Johnson (@PJTheEconomist) February 16, 2026
What is this £2.3bn giveaway? It is money paid to those in the mineworker’s scheme.
You will almost certainly not have noticed that in the last budget, the chancellor allocated a windfall of some £2.3 billion. And how did she decide to spend it? On dramatically enhancing the pensions of around 40,000 public sector pensioners, many — if not most — of whom are already pretty well off.
I should explain. Annex B of the budget red book is entitled “Delivering in Scotland, Wales and Northern Ireland”. For some reason, the announcement to which I am referring, despite being a UK-wide policy, is hidden away under the Welsh bit of that annex. Here we find the following statement: “The government will also transfer the Investment Reserve Fund in the British Coal Staff Superannuation Scheme (BCSSS) to the scheme’s trustees. This will be paid out as an additional pension to members of the scheme.” This is enough to enhance their pensions by 41 per cent, and pay a hefty backdated lump sum. What an amazing windfall for these fortunate few.
Why was there a surplus in the mineworker’s scheme? Well Paul doesn’t explain this, but the fact is that the Mineworker’s scheme was invested in equities (almost entirely) and that has generated (under Mark Walker) a massive surplus. This is now being paid to a second group of pensioners, not the coalface workers but those who managed the coal business and the engineers who kept the mines working.
Sorry Paul but without these workers there would have been no mining company in the UK, some of this second group of mineworkers are already doing well but to call them “public sector pensioners” is misleading. They did not appear in Yes Minister in 1970s suits, they were the company as much as the miners. Johnson goes on to explain that the mineworker’s scheme has been invested for growth but he thinks that the surplus deserves to be in the hands of the tax-payer who effectively guaranteed the pensions as the equivalent of the sponsoring employer.
You may be thinking, fair enough, this is a pension scheme and it is the pensioners’ money. They paid their contributions, so they should get any upside. But the whole point of these defined-benefit schemes is that they offer a guaranteed pension which is enormously valuable in itself.
In normal cases the employer will make up the difference if there is a deficit and, in active schemes, will take the upside in the form of lower contributions when there is a surplus. In this case the taxpayer was on the hook as guarantor, effectively in place of the employer.
The pensioners are getting the valuable pension which they were promised. There is no good reason to distribute the surplus to them. This is just another example of the British state as a machine for moving money from younger generations to older ones.
I ask my readers to consider the word “company” and of a “company pension”. The company is the people who works for it and it distributes the money it makes to its workers and those who own it. The money it pays into the pension scheme is not a handy wealth scheme for the shareholders or in this case the tax-payers.
What is different about the miners is that there is no new generation of them who could get the surplus paid into a DC or CDC pension. That is because mining is considered toxic both to the miners and to the planet , we don’t do mining anymore (well like we did).
So the only people who can get money from the pension scheme should be the fast diminishing group of (mainly) men who are still pensioners. The tax-payer does not have a right to this money.
I can think of many DB schemes in the private sector where there are younger people to whom the surplus of a DB scheme can be paid. I can think of their schemes , 75% of which are in surplus. I hope that as well as making good shortfalls in DB schemes (increases for work pre-1997 for instance), these schemes can be used to improve pensions for younger people in DC and in CDC schemes. That cannot be done for mineworkers but it can be done for millions of workers who need more income in retirement.
To Paul Johnson’s demand that this surplus money is paid to employers, let me point out that if the surplus is paid into young people’s pensions and invested in older people’s pensions then the money can be kept in UK companies and used to power growth in the economy. That of course involves stopping pumping the money into offshore insurance and stopping pouring money in DC plans into overseas companies (only 4% of Nest’s money was invested recently in the UK – I know that is changing and that is good).
I think we can get surpluses priming our economy through investment. The Stagecoach/Aberdeen transaction is an example of how, more can be done with superfunds and more can be done with CDC and guided retirement in DC.
To suppose that the surpluses of British pensions should be, as Paul Johnson supposes they should be, returned to employers is to defeat the point of pensions and their value to the people who are our great companies.
The cost of defending our country on pensions and pensioners
If the currency of the years to come is measured in our capacity to defend ourselves (hard power) where does the currency get created?
Our prime minister has spoken over the weekend of the need for us to bring forward money to re-arm Britain against a threat from Russia and those lined up with them
The big picture of Starmer’s speech is that the UK is already at war. At home we are living with the inflationary shock of Vladimir Putin’s invasion of Ukraine, we are rightly spending money to aid Ukraine, and we face both cyber attacks and indirect attacks on our democracy.
There seem two ways to pay for necessary increases in defence (reliance on the USA is no longer one). The first way to pay is to cut Government spending and that will hit pensioners in terms of health, benefits and pensions (the state pension is not a benefit like pension credits but both could be at risk).
The other way for more money to be set aside to defend ourselves is for Britain to grow. This is the route embarked on by this Government in 2024 which has so far has not turned up.
I saw one speech by Torsten Bell, at the Pensions UK investment conference nearly a year ago where the Pension Minister asked the audience to “Get Real” about what funded pensions could do. I applauded this at the time and in a couple of weeks I expect to hear more at a repeat of the Investment Conference.
If we do not want pensions to be cut, we must allow them to help the country grow and that means turning up the heat from the back thrusters of DB plans, turning DC saving into DC pensions and by accelerating something which brings the best of DB and DC together – CDC.
It is no use us going into huddles and debating what we are going to do. We as a nation are not growing but we are required to spend more money defending ourselves. We must either shrink pensions or abandon the de-risking of our pension system and “GET REAL”.
If I was writing for Torsten Bell, better still – if I was Torsten Bell, I would contextualise pensions within the threats that Britain face and make the speech once again a call for action from funded pensions. The Pensions Bill is nearly an Act, CDC legislation is now passed and we need only the CDC Code for completion of a new style of workplace pension.
It is time to wake up to the enormous business of pensions which can revive much of British productivity which has been asleep for two decades. It is simply not good enough to say we cannot afford to take risk, taking risk is how you get growth and getting growth pays for us to defend ourselves and have a proper healthcare – a proper financing of growing old.
We really have to look to the decisions we are responsible for individually and come together in Edinburgh and agree collectively to take responsibility. Whether in the LGPS, USS and the Railways – where there is still DB accrual, whether in the 75% of closed and private DB plans or the huge number of employers funding DC pensions for staff, there must be action. We simply can’t sit in our pension conference seats and listen, we must get back to our businesses and get the money set aside to pay pensions, invested. Britain must grow to meet the cost of defence.
Monday March 2nd – the big debate on small pension pots ; Cannon Street – City of London
The Big Red Button – Join the Debate
Overview
Solving the Challenge that is Small Pension Pots. Your input on this important debate is essential to drive a market-led solution.
The Big Red Button – Small Pots Roundtable
Join your workplace industry peers, specialists and regulators to see if we can hit The Big Red Button.
Save the Date – Agenda below.
Category: Business, Startups
Speakers
Event Chair – Andy Cheseldine
Samantha Seaton
Kevin Wesbroom
Gail Izat
Helen Dean CBE
Chris Curry
You can reserve a spot here
Posted in pensions
Tagged Andy Cheseldine, Cameron, Pensions, Sam Seaton, small pots
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When having a baby , short-changes women’s pensions – illegally.
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!
Canadian retirement challenges seem rather like the UK’s!
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
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).
AI is punk rock for the teenagers.
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.
Posted in pensions
Tagged AI, Anarchy in the UK, artificial intelligence, Business, punk rock
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The dreary work of the white-collars will be done by AI – what’s wrong with that?
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?
Pensions Oldies speak out on CDC
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.