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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LCP on the the CDC Code of Conduct. Can CDC succeed if uncommercial?

Posted on February 14, 2026 by henry tapper

Steven Taylor

TPR seeks views regarding amends to the CDC code to cover the authorisation and supervision of unconnected multiple employer schemes providing CDC benefits.

It’s an important consultation. With a group of colleagues we have separately made a response and I will refer to it in weeks and months to go. The key dates for this consultation are 31st July when TPR must respond and August 3rd which is the first day that it can receive applications for CDC for authorisation and six months after receipt the deadline by which time the authorisation will be made or rejected.

In short we are in a period similar to the authorisation of DC workplace master trusts and the uncertainty about the numbers of trustees applying (with proprietors) this year is uncertain.

This is the background to the responses by the consultancies and trade bodies who are advising the Pensions Regulator of their views. You can read them , collected by Holly Roach of Prof Pens on this link

One of those remarked on , is Lane Clark and Pensions and this blog ends with its consultation response, as they were kind enough to send it me. I hope that it will influence regulation following the commencement of CDC UMES regulation at the height of summer!

You can download it from this link, below my comments

Non commercial models need space

Too right. It’s well known that LCP have been helping the Church of England for some time to simplify the labyrinth of pension schemes for clergy, other staff and companies whose pension affairs they look after. I wrote about this a couple of weekends ago to celebrate the arrival of a new archbishop.

Steve Taylor of LCP broadly welcomes the regulator’s consultation as an “important step forwards” but LCP’s response says the draft code

“implicitly assumes all multi-employer CDC schemes will be commercial entities. Key non-commercial models are “overlooked”.

A key model for a traditional employer group to set up a CDC scheme is as a new section to an existing trust, potentially using an existing surplus to provide the contingent financial resources that the CDC section may need in the future.

Importantly, this means that these resources would already be held by the scheme, rather than need to be supplied by a commercial entity, the scheme proprietor.  We look forward to continuing to engage with TPR and helping our clients navigate exciting upcoming approvals processes over the coming months.”

Put another way, there needs to be a way for organisations having a DB scheme with a surplus to run a CDC from it it. The efficiencies are obvious though there are other ways for employers to operate including the use of mutuals where the employers own the proprietor and get dividends and/or benefit from patronage from excess revenues generated by the CDC.

Clarity on  what constitutes a section and when you must divide a scheme into multiple sections

There are options within the CDC Code for sections of the scheme to exist to ensure that fairness is maintained between employers. There may be reasons for some employers to have their own scheme, there may be schemes – such as TPT are suggesting there’s will be , which will run without sections.

There are ways for employers to have their own section (with the benefits of “own scheme”) while sharing one proprietor who takes care that the scheme is well governed, invested and fairly run for members. UMES is likely to deliver new structures and TPR must be flexible – appears to be LCP’s main suggestion.

There is need for clarification about paying a price for separation in a sector of a multi-employer scheme or setting up a single employer CDC scheme in an existing DB scheme (using the surplus). There does not seem to be space for UMES legislation to apply for the latter and the question is whether a CDC scheme can operate using the same code whether  a single or a multi-employer scheme.

Mixed benefit schemes

Given that an UMES scheme is envisaged as having a proprietor and the capacity to take multiple employers with a trust that masters all the benefits of all the employers, it becomes difficult to consider a CDC scheme as a section of a DB scheme – thus as a “mixed benefit scheme”.

I can see why consultants like LCP who have as clients both the schemes and the sponsors of DB schemes see CDC as an extension of this work. However the majority of the impetus for CDC is to allow employers to offer better pensions than can be achieved from a DC scheme and I hope that there does not creep into the CDC code a large section driven by advisers for a few employers like Church of England for whom a mixed benefit scheme might have a marginal advantage.

We do have a very complicated pension system as it is and we do not want a half way house between a scheme like Royal Mail’s (a single employer CDC) and a multi-employer CDC scheme (as envisaged by TPT).

In the end , mass-market CDC will only succeed if it is commercially viable

It is inevitable that LCP will argue the need for DB trusts and non-commercial sponsors to be catered for in the CDC code and it is right that they do. But the difficulty that CDC has had in moving forward is a lack of enthusiasm among employers for further bother from pensions. DC and workplace pensions have removed a lot of the trouble for employers.

It is now possible for employers to see pensions as worth troubling themselves with and we are seeing many large employers seeing the opportunity to be part of mutual arrangements where they can add real value to their staff’s long-term pensions through CDC.

The non-commercial end of the CDC market has so far amounted to Royal Mail who embraced CDC because it brought together staff , their unions and a Government looking for a better way than could be offered 130,000 posties through DC.

This combination is not being repeated elsewhere, there are no other pension strikes. But we do have a need for better than DC and employers, both those with DG and those with DC see pensions as part of their commercial strategy once again.

LCP are right to promote a non-commercial CDC scheme, the Church of England, but it is no more a model for employers than Royal Mail, the model that is needed must be commercial and commercial not just for a proprietor but for the employers who participate. By making pensions commercially attractive for employers, we may seem contributions to member return to the levels we know that they should be.

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This Valentine Card comes to you un-sponsored.

Posted on February 14, 2026 by henry tapper

As I made my way back from the posh shops last night I passed other men with champagne and cards in their trollies working out how to treat their wives and lovers with the “love” that was expected of them. This is the love that is engineered by those who make their money out of the  media exploitation of a saints day.

St Valentine’s Day when prices go up in the ether of love

The prizes of Valentine’s Day are all won by those who engineer this exploitation of a genuine human emotion into a financial package.

My house does not have Valentine’s cards for my wife. I have decided to go the digital way and spare the postman and paper massacred  trees.

My partner of a quarter of a century has got a digital card from an anonymous source and this is the confirmation I got early this morning.

It is the last and most absurd derivation of what Saint Valentine engendered many centuries ago. Make your way past pages of adverts for Valentine gifts and you come to Wiki

Valentine’s Day, also called Saint Valentine’s Day or the Feast of Saint Valentine,[1] is celebrated annually on February 14, It originated as a Christian feast day honoring a martyr named Valentine, and through later folk traditions it has also become a significant cultural, religious and commercial celebration of romance, commitment, and love in many regions of the world.

But thought there have been religious connections, the exploitation of St Valentine has been regular. Winchester made money out of a preserved head of St Valentine was a source of revenue for a Hampshire town well known to the pension actuary.

A relic claimed to be Saint Valentine of Terni’s head was preserved in the abbey of New Minster, Winchester, and venerated

But the history of Valentine is one of horror, persecution and of love persisting even when lives are terminated through violence. Even the heart that we think a sign of emotion may have been a sign of immanent death

According to legend, in order “to remind these men of their vows and God’s love, Saint Valentine is said to have cut hearts from parchment”, giving them to these soldiers and persecuted Christians, a possible origin of the widespread use of hearts on Saint Valentine’s Day

But for me as a student of English Literature, Valentine’s Day is the day when birds find each other and set in train the births of little birds later in the spring and this story of the Parliament of Fowles is unique in all that I can find on Valentine’s origins in being linked neither with commerce or horror

So my Valentine’s Day will be spent with my love by the river Thames with the sparrows, and tits and ducks and geese and swans and a pair of woodpeckers , green parrots and I hope a kingfisher. There will be pigeons and we hope no sparrow hawk (terrorising the starlings).

It will be our parliament of fowls and it will not be sponsored in any way, just like this blog. It will just be generated by love of life and on February 14th , a looking forward to great things in March and the end of winter. For many down south, who have not had a dry day since Christmas, it is a reminder that spring is nearly hear and summer after that.

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Something’s wrong with these Winter Olympics

Posted on February 13, 2026 by henry tapper

Somehow this didn’t quite happen for anyone last night!

It is very wet in the UK and that has probably good for those who have hosted the Winter Games in Northern Italy – it has kept us inside watching various sports we aren’t very good at. The failure of Great Britain to win a medal at anything has not stopped the BBC celebrating us getting a few fourth places nor encouraging us to get excited about acrobatics on skis and ski-boards.

I was excited by the prospect of the games, regardless of Brit performance – I have loved skiing in Bormio and Milan is a favorite town but I have spent a lot of the time I have watched these events hoping to love Italy but I have found myself feeling something isn’t quite right.

You don’t get the impression that the Italians are enjoying this very much – even if they seem to win quite a lot.  You don’t get the sense that any of the venues are very full, they are mostly dominated by American fans who can make a lot of noise. But a sense that this is an Italian event went with the opening ceremony which trivialised any sense of Italian culture into Verdi and Rossini dancing to disco.

Come on, we have a better view of Italy than this

The Guardian make the point that this Winter Games is getting nowhere with the Italian public and it’s getting more and more dull for the Brits the more nonsense we are forced to listen to from the half-pipers. Last night’s half pipe competition was about the worst sporting event that could have been featured with no-one staying on their feet but the medallists who none of us could tell apart as they hid behind layers of protection.

Don’t get me talking about luge and other sports which we may actually get a medal at, this drives me to Sky – or more likely to read or listen to the radio.

Here is how Jamie Mackay, who should be loving these Olympics, feels.

The Winter Olympics should be about humanity, culture and, most of all, the collective enjoyment of sport. With these Games, Italy has been left to settle for a glitzy performance that speaks to no real public at all.

Milan, one of Europe’s most culturally exciting cities, has had scant opportunities to share its genuine talent with the world. The Dolomites, home to Italy’s most beautiful ecosystems, have been reduced to a luxury simulacrum of themselves, at the expense of longstanding rural communities.

As the athletes continue to dazzle with their skill, it’s impossible not to admire the sportsmanship. What a pity that the organisers have so tarnished the occasion by exploiting the very hospitality on which a successful Games depends.

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Schroders is now earned by TIAA . Will “Schroveen” now take on (C)DC pensions?

Posted on February 13, 2026 by henry tapper

I have to admit to be shocked, Nuveen are not new to me but I had not realised who owned them. Here is my most mischievous fund manager commentator calling the deal a shake up of UK DC (and maybe CDC). TIAA is America’s big DC plan manager.

The asset manager arm of TIAA buys Schroders with its spare cash.

Makes me wonder.

Will they sweep up Nest and People’s?

He suggests that Duncan Lamont Head of Strategic Research Unit at Schroder, will have plenty of data to work on.

And here’s my favorite elderly actuary’s view on TIAA now being the ultimate owner of good old British Schroders.

TIAA are the bees knees. I am in touch  with their research people on a report they have done, right up my praising and moaning street.

A blend of the OECD bible, Pensions At A Glance and the Mercer Melbourne publication. .

But they are good. I suspect TIAA could be the biggest DC pension plan.

And are big time developing annuity lite options. They have been around for a century I guess, so plenty of retirees with large pots.

Here is  Toby , who seems equally shocked to find TIAA in charge!

So here’s Robin Wrigglesworth and Toby Nangle working it out

Schroveen, because Nuders seems too rude?

Big news for the UK finance industry this morning, with the Schroder family selling its eponymous asset management business to Nuveen.

Mary McDougall: Schroders has agreed to a £9.9bn takeover by US asset manager Nuveen in a deal that would end the independence of one of the City of London’s most historic names.

Given Alphaville’s above-average interest in the investment industry in general and the City of London in particular, we thought we’d do an annotated version of Main FT’s story, with our own hot takes on various aspects of the deal, and what it says about Schroders, Nuveen and the investment industry in general.

The group has agreed to a 612p a share offer by Nuveen, part of the Teachers Insurance and Annuity Association of America — a retirement savings group — that would create one of the world’s largest asset managers with $2.5tn of assets.

This is obviously a moving target, but judging from the last comprehensive survey published in 2025 and how markets have evolved since then, Schroveen will still be slightly smaller than Amundi and fail to crack the list of the top-10 largest investment groups in the world.

Which says a lot about just how big the big have become in asset management.

The offer comprises 590p in cash — a 29 per cent premium to Schroders’ closing share price of 456p on Wednesday — and 22p in dividends to be paid by the FTSE 100 group to its shareholders before the deal goes through. Shares rose 30 per cent to 592p in early trading on Thursday.

Depending on your perspective, this is either a surprisingly skimpy premium or a surprisingly decent one.

The controlling family didn’t have to sell — the company still threw off £674mn of pre-tax profits last year — and Schroders is a premium brand. Until very recently, it had been considered more likely to be predator than prey in the asset management industry, and has been adding various trendy bits to its core business in recent years, like renewable energy and private capital. As recently as earlier this week it announced a partnership with Apollo.

However, it’s become bogged down in what industry insiders call the “muddling middle” (Alphaville prefers the more evocative “valley of death”). It is neither a smaller, nimble boutique focused on a specific hot niche or large enough to compete with the mostly American asset management juggernauts.

Being based in the UK is also arguably a disadvantage these days. With fees under ridiculous pressure from the rise and rise of passive investing — which is now growing as quickly in Europe and the UK as it is in the US — Schroders’ halcyon days of stonking operating margins look like an artefact of yesteryear. Given all this, a 29 per cent premium to Wednesday’s close looks decent.

It’s a 53 per cent premium to Schroders’ share price a year ago, and not far from the highest it’s ever traded at, four years ago. The two companies said Schroders’ brand would be retained and London would be its largest office. That’s perhaps good for London. And London already punches well above its weight when it comes to assets actually managed, rather than assets managed by companies headquartered in the UK. According to the Investment Management Association, over £12tn of assets were managed out of the UK.

This compares to just $7.6tn of assets managed by top 500 companies headquartered in the country. But combining the Schroders rectangle with the Nuveen one will shrink the pink UK area on our tree-map to a size smaller not only than the green Canadian area, but also the dark red French area. Zut alors! 😱

Moreover, once under the leadership of Nuveen there’s no guarantee that the London operation will thrive. Asset management industry consolidation is notoriously difficult, and pretty much the only truly successful examples we can think of have involved complete and unapologetic takeovers. Perhaps this will be the deal to buck the trend, and Schroders ends up on top. MassMutual did end up rebranding Babson — its substantial fixed income business — as Barings.

But Alphaville is sceptical that the “multi-boutique” model actually works, and would bet that eventually the Schroders name goes the same way as Cazenove (JPMorgan), Warburg (UBS), Morgan Grenfell (Deutsche Bank), Mercury (BlackRock) and Schroders the bank (Citi). On we go. The deal comes just months after chief executive Richard Oldfield moved to quash speculation that the Schroder family, which has a 44 per cent holding, was looking to sell the business.

“No, there’s no intention of the family to sell,”

Oldfield said in July.

There may be other examples of asset management businesses with glowing prospects, huge ambitions and zero interest in selling out that choose to promote to CEO a CFO with no previous investment industry experience. We just can’t think of any. On Thursday, Oldfield said:

“This business was not and has never been up for sale . . . This isn’t the outcome of us surreptitiously doing an auction — I don’t think I’d have been able to keep that quiet.”

It is indeed interesting that nothing about this leaked out in the infamously gossipy City. Perhaps this is because Schroders’ lead financial advisor was Wells Fargo, which is not a name you often see on M&A deal sheets. It looks like the senior Wells banker on the deal was Doug Braunstein, who only joined it two years ago after almost two decades at JPMorgan, where he was head of global M&A and CFO, among other jobs.

Looks like he’s starting to earn his keep. [Oldfield] said Schroders had agreed the deal because it

“saw a huge opportunity to create something powerful and unique”

with Nuveen. Schroders has been attempting to cut costs and boost growth. Before the takeover announcement, the 221-year-old company’s share price had dropped by more than a fifth over the past five years. Oldfield said the deal was “not about saving money” but driving growth and that Nuveen would

“not be shedding heads over and ahead of what we’ve already envisaged in our transformation project”.

He said the transaction would

“significantly accelerate our growth plans to create a leading public-to-private platform with enhanced geographic reach”.

It’s certainly a very big move by Nuveen, which is a very US-centric company — it was originally founded in Chicago in 1898 as an investment bank focused on selling municipal bonds before gradually branching out into the investment industry. It eventually ended up in private equity hands, before TIAA-CREF swooped for it in 2014. TIAA started out as the Andrew Carnegie-bankrolled pension system for US professors — it stands for Teachers Insurance and Annuity Association of America — and remains a non-profit.

The virtual absence of geographic overlap and TIAA’s unusual structure certainly bodes well for nervous Schroders employees who might remember what happened to a lot of former Barclays Global Investors and Mercury people when BlackRock took those firms over.

The transaction, which will need shareholder approval, is expected to complete in the fourth quarter of 2026. Oldfield, a former PwC accountant, has taken the knife to parts of the business since taking over in November 2024 with the group’s shares at a 10-year low. The shares had risen 19 per cent in the past 12 months before Thursday’s deal announcement.

He ended a joint venture with high street bank Lloyds Banking Group to concentrate more on its wealthier customers. Schroders has also exited sub-scale operations, including in Brazil and Indonesia. This week Schroders announced a partnership with US private equity giant Apollo to develop wealth and retirement products. The takeover was announced as Schroders reported its pre-tax profits rose 21 per cent to £674mn in 2025.

This is important to remember amid all the headlines about the asset management industry’s troubles. Despite all the pressures and murky outlook, for the most part it remains a phenomenally profitable business. This is why people like Nelson Peltz and some private equity firms still like the traditional asset management industry. Or rather, at least find it financially interesting.

Sure, the competition from cheap passive funds on one side and expensive private capital on the other is intense, but money tends to be stickier than many people assume. Even severely underperforming funds can often totter on for years and years. Meanwhile, buoyant markets can mask a lot of outflows.

This is why the headline assets under management figures and profits of most asset managers have continued to climb, despite monstrous outflows of their active strategies over the past two decades.

Still, you’d rather be trapped on a melting iceberg than a sheet of ice, which is why the asset management industry is so aggressively bulking up these days.

After all, the fee pressures are even more intense in the US investment industry than they are in Europe — as the Investment Company Institute detailed in its last  factbook — which explains why Nuveen is also looking to get even bigger.

OK we’re in the final stretch here, but the FT’s news story raised an interesting point we also wanted to address: Oldfield has been an advocate for London’s stock market and last year warned against calling the “death” of London equities, arguing that listed companies were vital for transparency and holding management to account.

On Thursday, as he announced the deal that would see Schroders leave the public markets, he said:

“We can obsess about the listing, but what is absolutely undiminished is our commitment to supporting and driving the UK capital markets.”

Does this matter? Really? Alphaville’s feeling has long been that the paucity of London listings is at worst a symptom of the UK’s post-2008 economic malaise, rather than a cause, and actually doesn’t necessarily matter much to the City’s health. Or at least nearly as much as all the attention the subject receives might indicate.

People seem to forget that London’s 19th- and 20th-century heydays were built on bonds, not stocks. Nor did the 1980s-onward American/German/Swiss invasion dent the City’s status as a global financial centre. In fact, it helped entrench it.

Still, for those of us who like having at least a few of the good old names around, it’s obviously not great news to see Schroders selling itself.

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Time to Rethink DB Pensions? Why Our ‘Excessively Prudent’ Era Must End.

Posted on February 13, 2026 by henry tapper

Roger Higgins

This blog is by Roger Higgins

Senior pensions adviser, trustee and leading pensions technology consultant

Having spent decades working in pensions, I’ve seen cycles of surplus and deficit, but the current position – with over £200bn in combined scheme surpluses – feels fundamentally different.  It forces a critical question: have we, as trustees, become “excessively prudent” and in doing so, will this be to the detriment of members?

My admiration for the Mineworkers’ and Stagecoach pension trustees has grown because they’ve answered this question boldly.  Investing within appropriate regulatory guardrails, they’ve used investment returns, not just to secure benefits, but to improve them for members.  Hearing John Hamilton detail the significant boost for Stagecoach members post-Aberdeen deal was a wake-up call.  It should be one for all trustees of well-funded schemes.

The Pendulum Swing: From Surplus to Deficit and Back Again

My pensions career began in the late 1980s, amid the first “surplus regulations.”  Back then, open schemes with high equity allocations faced a choice: contribution holidays, benefit improvements, or a tax bill.  The concept of derisking to “lock in” a position was alien; the focus was on using returns to maintain pensions’ real value through discretionary increases.

Then the pendulum swung.  Legislation improvements, accounting changes, and scheme closures shifted the narrative entirely.  The PPF’s creation and the Pensions Regulator’s necessary focus on protection made “derisking” the mantra.  Equities were swapped for bonds, deficits grew, and the singular goal became a slow, painful march toward insurer buyout.

The New Crossroads: Security is the Floor, Not the Ceiling

Today, funding levels have transformed.  Security is now the baseline.  The Stagecoach transaction has shown that for well-funded schemes the current frontier of fiduciary duties is member benefit improvement.  This challenges the orthodox endgame playbook – especially for the largest 200 schemes who have the scale to run on.

As trustees, we must now grapple with four critical issues:

1. The Goal: Guaranteed Minimum or Meaningful Maximum? Is our duty merely to secure the contractual minimum, or—when a scheme is powerfully funded—to pursue the best possible outcome for members?  Stagecoach chose the latter.  For other strong schemes, not exploring this path is a choice in itself.

2. The “Reckless Prudence” of Investment Strategy. We’ve derisked to below insurer levels.  But here’s the irony: if we transferred to an insurer tomorrow, they would likely re-risk the portfolio to generate profit.  Why do we outsource the potential for upside to a third party?  TPR guidance and guardrails are informative and so what’s stopping us from operating under a prudent, well-governed re-risking strategy for members’ benefit today?

3. The Silent Sponsor & The Forgotten Surplus. Many sponsors see de-risking as a way to remove balance sheet volatility.  But this often means gifting hundreds of millions in future surplus to an insurer.  Why aren’t more initiating surplus-sharing discussions?  A transparent model (e.g., one-third to augment member benefits, one-third to the sponsor, one-third to enhance DC pots for the workforce) could align all stakeholders and create immense value.

4. The Unfinished Business: GMP Equalisation. This is a stark litmus test.  How many schemes are knowingly underpaying members their legal due, with no clear remedy plan?  It’s unacceptable.  How can accounts be signed off without disclosing this?  Fixing GMPe isn’t just administrative; it’s a core fiduciary duty and a prerequisite for any higher ambition.

A Call for a New Trustee Mindset

The Stagecoach deal isn’t an anomaly; it’s a beacon.  It shows that for well-funded schemes, the historical “deficit mentality” must evolve into a “surplus opportunity” mindset.

I’m keen to hear from fellow trustees and professionals:

· How many boards are actively exploring benefit improvement strategies?

· Does a material surplus change members’ legitimate expectations of what we should deliver for them?

· Is it time to re-risk portfolios strategically, mirroring insurer economics for members’ gain?

· How do we move GMPe from the back burner to the top of the agenda?

The era of simply minimising risk is ending.  The new challenge is to optimise outcomes.

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