Robert Cochran has consistently banged the drum for workplace pensions and he’s been a supporter for all that Guy Opperman held dear when it come to saving and engaging Scottish Widows with their pension. If you have some time and can plug into his pod it can be reached from this linked in post.

Opperman has not tied himself as Steve Webb did to a single organisation. I am sure that Scottish Widows would benefit for employing Opperman as Royal London benefited from Webb.

Instead Opperman has built a portfolio of customers including firms in the UK , the Middle East and in extremity – South Africa. He has been on tours to Australia and spoken alongside pensions dignitaries around the globe. Generally he makes sense.

In this pod he looks back nostalgically at his time as pensions minister and is particularly interesting as he talks his way through the slow disintegration of his party in Government. He is touching as he explains how he got his pensions legislation through despite the indignities meated out to him by Boris Johnson and Liz Truss. Rishi Sunak comes out well in this (I know he had a strong relationship with the then DWP SOS, now shadow Chancellor- Mel Stride.

He is kind to the Labour Government’s pension team who he sees as seeing through Pension Superfunds and CDC which he sees himself as initiating. I suspect there is something of a rewrite here, but let it be, he was an early adopter of ideas which may be coming to fruition this decade.

Less successful may have been the attempts to make workplace pensions fill the gap left by the demise of SERPS on one side and private DB pensions on the other. The harsh reality is that his first challenge was to implement the 2017 auto-enrolment enhancements to contributions. He did not get them ( he says because of the Treasury and he blames the Treasury for failure to fulfil a promise made nearly 10 years ago. Will it make the cut-out of 2030 and change of Government, Opperman doesn’t think so.

Opperman wasn’t universally liked within his own department and certainly not by Steve Webb. It is hard not to like him out of Government just for his good humour and Harrovian good manners. I’ve had good conversations with him over the years and thoroughly enjoyed his podcast. Robert Cochran is his kind of man and Guy Opperman is a man’s man. All the same, he lacked clout in Government and in that he’s been bettered by Torsten Bell.

Whatever we got from Guy Opperman, is secondary to what we’re getting from the soon to be Pension Schemes Act. But GO’s Pensions Act sent us towards a consolidated private system which we might yet get!

He lent the job of Pensions Minister a fresh exuberance we have not seen since!

Opperman’s exuberant style

As part of the work we have been doing set up Pensions Mutual and a CDC to provide workplace pensions from the start of 2027, we have been looking at how pension administration looks in the UK.

We started looking at pure systems providers , Lumera and Festina are overseas players who have credentials from delivering CDC in the Netherlands and variants up and down Europe’s West Coast from Scandinavia down. My impression is that they are focussing on DC and DB administration.

We are intrigued by niche players such as Spence’s Mantel supplier which brings us homegrown software that is already in place in integrated administrators such as GPA and Barnett Waddingham but much of what we see from the consultants still looks to be adaptations of historic systems such as Profundi. Aptia alone is advertising itself as a CDC administrator offering.

I suspect that most of the work being carried out at the large consultants – Mercer, Aon and WTW will focus on delivering Retirement CDC from 2028 onwards and that this will not be an accumulation product. Whether the existing DC and DB services will be adapted to deliver UMES whole life workplace CDC schemes remains to be seen.

It’s a time of change, not least in pension admin management. What was JLT/Mercer admin has been bought out by Bain and re-established as Apria, WTW has a new bos

Aon is keeping quiet but is widely reckoned to be launching its own CDC UMES workplace pension plan which would sit alongside its workplace DC master trust.

That leaves a few slightly smaller integrated administrators who must be considering whether to deliver CDC to rival DC as a workplace pension. Isio have recently brought into the fold Premier Pensions and found a new head of admin , Hymans have recently sold its non core business to Howden while XPS must have a gaping hole to fill having recently lost a big client.

This is all headline stuff!

What of AI?

Into the miasma of pension administration comes AI that is bound to make a stink over the next five years as manual processes get replaced by processes driven by artificial intelligence). The outcomes are still focussed on humans but getting there will need less humans and will be more reliant on what has been learned from systems of the past.

Every conversation we have with pension administration offers us a new take on how systems providers and administrators are coping with the challenge of being de-humanised and I would not be surprised if the first robo- administrator follows the first robo-taxi into production by the end of the decade. If I can put my getting around town into the hands of AI , I can put my saving for and paying of my retirement income.

I discovered the other day just how distant my life had become from paying in cheques. This was a wake up to me that I now expect things to happen without human interaction.

How close are we to administering workplace CDC?

CDC collects contributions like AE workplace DC pensions do. But it pays  the build up  of pensions as a DB scheme. The tricky bit is the allocation of pension entitlement to those saving for retirement and this will with UMES be based on dynamic pricing which buys entitlement with each new contribution but can increase (or decrease) the value of each pension entitlement according to the state of the fund and of expected future liabilities (pensions).

The system of pricing, valuations and display of pension due (on the dashboard and conventionally) has yet to be cracked by any administrator we have talked to and it looks to me that actuaries, administrators and investment fund managers need to be integrating their offering digitally and not relying on human fallibility! We are looking at the perfection of digital solutions and procuring the means to get it will be a big task for proprietors of CDC schemes – together with their scheme executives and trustees.

We do not want to build in the dark , we will build by corresponding with TPR, Church of England and any other UMES CDC players who appear in the next few months. Administration is one of the big challenges with getting CDC pensions going in the workplace! We cannot replicate Royal Mail though we bless them for opening the door for the next wave of innovation!

Is human talent in the attic- gathering dust?

I was looking at the people building Pensions Mutual and found that only three of us cannot draw a pension (being 55 of older). Seventeen of the people working with me to deliver a CDC pension to a wider group of people would otherwise be under-deployed (for the talent that they bring).

This article was brought to me by one of those who “liked ” it, he’s one of those helping out and doing so with an energy and expertise that we all value.

Thanks to Avivah for doing more than “liking” , thanks for writing what needed to be written. Let’s not let all our experience sit in talent’s attic gathering dust.

I am not sorry that those who have picked up a fortune in inheritance. It is now confirmed that they are going to have to pay 7.5% on inheritance tax outstanding to HMRC , six months after the death of a wealthy person.  This is only if tax due has not been paid within six months of the death of the wealthy person. It relates to tax on unspent pension pots chosen to benefit from pension freedom exemptions.

Charging interest on money outstanding is quite reasonable of the Government and charging tax on an unspent pot of someone drawing down in retirement is a risk those in future will be taking when making decisions on how to use retirement savings.

The retirement savings in question, were originally supposed to be to “purchase” an annuity and freedom from this obligation was announced when Steve Webb was the Pension Minister in 2014. The decision was announced by George Osborne and immediately gave rise to a tax loophole for rich people.

That loophole meant that they could live off other savings than the pension and use the money saved in a “money purchase” pension , not to purchase an annuity but to avoid paying inheritance tax. That loophole is now being closed, the money free from being used as a “pension” but privilidged by an “exempt- exempt- exempt” tax treatment , is losing one of the three tax exemptions.

The same Steve Webb who was there the Pensions Minister is now calling another Government for making sure that the tax is paid in full and on time (or with commercial interest if not paid on time).

Here’s the parliamentary statement made this week confirming the state law will be applied. Thanks to Mary McDougall of the FT. In a response to Parliament’s upper house this week, Dan Tomlinson, exchequer secretary to the Treasury, said the government

“does not intend to change the existing, longstanding deadlines which ensure tax is collected quickly and efficiently”

“IHT is due at the end of the sixth month after the date of death”.

There are many things going on in the world right now that are inhumane. But forcing those who manage other’s affairs after their death to do so to a recent timescale is not high among them. Steve Webb is stretching Liberalism too far for me. I am a Liberal, all of my family have been Liberal and my father was the first Liberal lead of Dorset County Council. I deal with matters to do with his and my mother’s estate . I actually find this statement from Steve offensive to a family who will pay inheritance tax in due course

“It’s inhumane . . . No consideration has been given to the human dimension of this. Often bereaved people have a lot to cope with,”

said former Liberal Democrat pensions minister Sir Steve Webb, now a partner at consultancy LCP.

“What difference would six months make to the government, compared with the difference it would make to families?”

To write financially, it would mean paying an extra amount of IHT as late payment tax and that’s tough luck for those who struggle to find pension pots. By April 2027 they may have the dashboard to help them but if they don’t , they will have the records of the bereaved. If the bereaved has an unspent pot which forms part of an estate that will typically be valued at a million pounds of more, then I’d expect it to be valued within six months. If the worse happens and it doesn’t, then 7.75% pa hardly seems penal.

Steve Webb  , you should stop pleading for the wealthy and continue your amazing work for those with prospect in retirement of poverty.

A little context

The government estimates its pension proposals will bring about 1.5 per cent more estates within the scope of death duties in 2027-28, on top of the 4 per cent that already exceed the £325,000 nil-rate band, which can rise to £500,000 where a property is passed on. 

UK inheritance tax is applied at a rate of 40 per cent above the nil-rate band. Pensions will still pass to spouses and civil partners without incurring inheritance tax.

I find myself in this photo or a 1990 St Johnstone shirt!

I am in Perthshire, yesterday I was in Perth immersing myself in its museum, a brilliant exhibition on the death of Mary Queen of Scots (with her last letter featuring) and the Stone of Scone which is exhibited in two rooms of wonder!

But for me, the highlight of a great day in Perth was to discover that it was Scotland’s capital of glove making , just as Yeovil is England’s. This may not mean much to most readers but if you are a football fan with St Johnstone your team in Scotland and Yeovil Town your team down south it is quite amazing news.

For the Glovemakers incorporation in Perth brought a second Saint into play, St Bartholomew , who gruesomely was skinned at his death (hence the scalp knife he’s holding in this painting from Perth Museum). The skin of St Bartholomew was a reminder of glove making of the City.

So St Bartholomew should be Yeovil Town’s Saint too – I’ll suggest as much if I get a chance.

Yeovil does not (sadly) have the history of Perth. It does not have a church that has been operative since the 13th Century or a history of glove makers making noise in town as far back as 1604 when James VI of Scotland was James I of England.

While Yeovil could learn a little from the Perth (the town of St John) , I think St Johnstone could learn a little from Yeovil , whose continued enthusiasm for football is despite falling through the divisions.

St Johnstone look set to go up this season (hurrah!) , Yeovil will avoid further relegation (hurrah) but both my teams are Glovers (at least to me).