Gordon Aitken finds M&G adds value to bulk annuities while I see it “leaseholder stripping”

Posted on September 4, 2026 by henry tapper

M&G has a business that can grow, it can grow through its with profits “Prufund” which I think could do other things than back bulk purchase annuities. Gordon has discovered that the key that turns the lock for Prufund is the bulk annuity purchase “plus” that with-profits brings. I wonder if it mightn’t help insurers do rather well.

A bright side and a dark side of M&G

This is the bright side of M&G but there is a dark one too. Leaseholders in the UK find themselves paying exorbitant ground rent and service charges. This is one of the funds that they will end up paying too.

It is outrageous that it thinks that the Government’s plan to reduce ground rents to £250 from 2028 with it taken to £0 in 40 years time. If that is disproportionate, then what has M&G got to say to the 5m people who own leasehold property in Britain today

This from City AM

M&G: FTSE 100 giant hits out at Rayner’s ground rent cap as it suffers loss

Ministers and backbenchers discuss immigration overhaul, addressing concerns over proposed policies in a government meeting.
Rayner helped steer the ground rent cap plans.

Asset manager M&G has swung to a loss driven by the Labour government’s introduction of a cap on existing ground rents.

The FTSE 100 group hit out at the government after it reported a £165m loss for the first six months of the year, driven by a £325m write-down eating into its bottom-line. In its core operating profit, a measure which excludes the write-down, the group posted a 15 per cent increase to £435m.

Housing secretary Angela Rayner has been one of the key advocates for the £250 annual cap on pre-existing ground rents, which refers to annual fees paid by current leaseholders to a freeholder for the land beneath an older property.

M&G’s shareholder fund holds approximately £722m in UK ground rent assets, which generate long-term income streams to pay future customer pensions. The group was forced to recognise the write-down after the cap limited the cash flows the freeholds could collect, slashing the value of the assets.

Labour’s solution is ‘disproportionate’

Labour is targeting eventually phasing the cap down to £0. M&G said it had lobbied the government for a softer alternative, advocating for a cap tied to initial lease amounts with inflation-adjusted escalations as opposed to a blanket £250 cap that winds down.

“While M&G fully supports the Government’s objective… the proposed solution is disproportionate,”

the asset manager said at the beginning of the year.

It added:

“These changes, if implemented, would negatively impact savers and companies that have chosen to invest in UK assets; they would also set a worrying precedent, leading to consequences for the UK’s reputation as a stable investment location.”

There is a good and bad M&G and let’s hope that they will dispense with the bad one.

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Reasons to be cheerful 1-2-3, Richard Smith takes lessons in pension engagement

Posted on September 3, 2026 by henry tapper

I am getting three lessons from Richard Smith; he’s learning from what he’s getting from his pension providers.

As usual, I feel I am on the same page (or should I say screen) as Richard. I follow him down the corridor  into the class room for lesson two.

Break…

And after break it’s back for lesson 3

The delight of social media

A comment from someone who has a healthy grasp of the capacity of technology , Derek Scott has contributed on social media. I’ve included my reply.

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Derek Scott and his part in the creation of the Mineworker’s surplus

Posted on September 3, 2026 by henry tapper

I should put some context to the comment below, made by Derek Scott after he had read my article about putting the £15bn surplus in the PPF to work.

There seem two types of surplus in UK DB pensions, those that have been created by high bond yields (please read here for more) and surpluses that have been created by real investment. It comes as no surprise to me that Derek Scott is behind two  “real surpluses”, one the Stagecoach Group Pension and another the Mineworker’s.

Those who know Derek, those lucky enough to have worked with him, others (me included) who have been taught by him since he’s retired, will understand his genius and the value he has brought. Like Con Keating and Andy Young, he is of a generation that made UK pensions what Frank Field called, “Britain’s economic miracle”.

Our invested pensions created surpluses from growth and not ephemeral yields from our inflated debt.

Below is a comment on my exasperation that we can have such wealth in our DB pensions, especially the PPF but such hardship among those who are pensioners. Andy Young reminds me that those most hard up in later years get pension credit, more can be done with that too but Derek’s comments are pension funds and how they can be managed properly by Government.

Below is Derek’s comment to my blog on pension surpluses, the picture is from the Government.

The money added to members’ benefits (£1.5 billion from the Mineworkers’ Pension Scheme and £2.3 billion from the British Coal Staff Superannuation Scheme) came directly from investment reserve funds and surplus cash generated by the pension funds’ own assets since 1994, not from a “gift of taxpayers’ money”…….

In the 30 years since privatisation, HM Government has received approximately £7.9 billion from the schemes’ surpluses without needing to contribute taxpayer money.

I have to declare an interest, having served for four years between 2004 and 2008 as the last UK government appointment to the mineworkers’ scheme made by the then Department of Trade and Industry. Responsibility for subsequent appointments passed to the trustee board.

UK government did not expect or forecast a specific value as high as nearly £7.9 billion when establishing the 50:50 surplus-sharing arrangement during the 1994 privatisation of British Coal.

Parliamentary reports and select committee findings have noted that the 1994 arrangements and the 50:50 split were set up arbitrarily without detailed long-term actuarial forecasting or due diligence on how large the surpluses might eventually grow.

For further background

commonslibrary.parliament.uk/research-briefings/sn01189/

The surpluses ultimately surpassed initial expectations because the schemes’ investments performed much better than anticipated over the following three decades. No UK Government contributions have been required since privatisation.

The schemes’ actuary continues to be the Government Actuary’s Department.

Remember we are talking about schemes which were closed in 1994, which means they operate for existing pensioners and deferred members at that time. The survivors and their dependants are not getting any younger.

I would suggest in agreeing to waive the remainder of any mineworkers’ scheme surplus-sharing, which was due to end in 2029 as a backstop anyway, UK government has acted as an exemplar among sponsors of occupational pensions.

Private sector employers such as BP, Goldman Sachs, Hewlett Packard, Nissan, Shell, and others, have been criticised for capping annual increases or withholding discretionary adjustments.

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CAPAdata creates a workplace pension benchmark to judge VFM with.

Posted on September 3, 2026 by henry tapper

Below is Corporate Adviser’s good news for those measuring the performance of workplace pension money. I find it extraordinary that this is not getting more publicity but suspect that where it should be news , this is seen as competition.

I hope that those taking decisions on behalf of staff – the employers – (and 76% of them are currently reviewing DC as CDC emerges) will findCAPAdata’s benchmark helpful.

It is recognised by the FCA and that is an important step for it’s adoption as recognition of Value for Money.

CAPAdata gains FCA authorisation for workplace pension benchmark

CAPAdata has been authorised by the Financial Conduct Authority as a benchmark administrator, with the Corporate Adviser Pensions Average (CAPA) now included on the FCA’s official benchmark register.

The authorisation marks a significant milestone for CAPAdata, which has tracked the investment performance of the UK’s largest workplace pension default funds for the past eight years.

CAPA provides an independent comparison of investment outcomes across defined contribution pension providers, which collectively manage over 98 per cent of the multi-employer DC sector. It tracks providers biggest default by number of active members. The CAPA average has been cited in numerous consultations on workplace pensions, particularly in relation to the new Value for Money Framework for DC schemes.

The benchmark enables pension providers, advisers, trustees, consultants, employers and savers to compare performance on a consistent basis across different stages of a member’s savings journey.

The importance of these comparisons is demonstrated by significant differences in member outcomes between workplace pension defaults.

CAPAdata analysis shows that a growth-phase (younger) saver investing £10,000 over the five years from Q1 2021 to Q1 2026 would have seen their pot grow to £18,026 in the best-performing default fund, compared with £12,573 in the worst-performing fund, before charges are deducted. The gross investment growth achieved by the best performer was more than three times that of the lowest performer.

Over 10 years the dispersion of investment outcomes is even greater. CAPAdata figures to the end of 2025 show a 144 percentage point difference in returns between the best and worst providers, for growth phase savers. The highest return delivered was 232 per cent, before charges are deducted, compared to an 88 per cent return for the lowest. The CAPA average was 139 per cent. Big gulfs in performance also exist for savers 5 years from state pension age and 1 day from state pension age, the CAPAdata data set shows.

CAPAdata tracks investment performance at different points in the glidepath, alongside asset allocation, ESG characteristics and other aspects of workplace pension propositions.

The FCA authorisation comes as scrutiny of value for money in workplace pensions continues to increase. Investment performance, including risk-adjusted returns, is expected to play a central role in future assessments of whether schemes are delivering good outcomes for members.

Samantha Seaton, CEO of CAPAdata, said:

‘This authorisation is a real milestone for CAPA, but the prize is what it enables: a robust, independent view of how workplace default funds are actually performing, at the points in a member’s journey that matter most.

‘I want to recognise the providers who have submitted their data over the past eight years – and in return, they now have a genuinely independent, regulated benchmark against which to assess their own performance, which I know matters as much to them as it does to the members they ultimately serve.

‘This achievement belongs to everyone who believes better data means better decisions – and, ultimately, better retirement outcomes.’

Andrew Cheseldine, chair of the CAPAdata oversight committee, said:

‘I am excited to join the Governance Committee of CAPAdata on its introduction as an FCA regulated benchmark. I have watched it grow over the last 8 years from a germ of an idea in John Greenwood’s head to a highly regarded and widely used data resource.

‘Given the focus on scheme data for VfM and regulatory purposes, it is important that our governance framework is robust and transparent – I look forward to working with the rest of the committee to ensure that continues in the future.’

John Greenwood, director of CAPAdata, said:

‘Risk-adjusted performance will be one of the biggest, if not the biggest determinant of retirement outcome for millions of UK workers. A robust benchmark that the industry can rely on will enable stakeholders of all sorts to compare, contrast, analyse and hopefully improve their investment decision-making.’

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Good times for DB pension funding? Surpluses on paper, but bond yields spell hardship for the country.

Posted on September 3, 2026 by henry tapper

This is the headline in the FT this morning , Thursday 3rd September, eight weeks before a looming budget statement.

This is not a good time to prepare your first Budget statement and John Healey is like the Tottenham Manager, inheriting a lack of confidence with a difficult time ahead.

The bond yields that make funded DB pensions look so well funded mean that the cost of borrowing for the country is at memorable highs.

Prime Minister Andy Burnham returned to Westminster on Tuesday facing a global bond sell-off that pushed UK borrowing costs to their highest level since the 2008 financial crash.

The yield on the 10-year gilt — a benchmark for the country’s borrowing costs — jumped to its highest figure since 2008, rising 0.11 percentage points on Tuesday to 5.21 per cent.

The 30-year gilt yield shot up this week as much as 0.12 percentage points to 5.9 per cent, its highest level since 1998.

The rising cost of UK borrowing is hanging over Burnham’s new administration, as chancellor John Healey prepares his first Budget on October 28, with questions being raised about how he will fund plans on social care and living costs.

Although part of the pressure on our bonds is “global” – general to all developed countries, our borrowing costs are higher than our immediate peers.

We differ to my mind in being an economy that has funded pensions that form part of our welfare, provide money to us in retirement in a way that we should be proud of.  The surplus of funding in our private sector DB funds and the LGPS results from these funds mainly being invested in bonds and not in UK growth stocks. Were our DB pensions invested for UK growth, we would have a stronger economy but not such rosy surplus figures.

Right now, we can lock into these high borrowing rates by exchanging our DC pots for annuities, which are at the rates that overvalue our DB pensions and create problems for our Chancellor as he tries to fund the country’s economy. I am not advocating buying personal annuities because the deal is good, though many people my age, who pay attention, are buying annuities for a variety of reasons.

I don’t think that investing in bonds , as annuities do, will return me a pension as good as I can get from my pension fund being invested in growth stocks (including UK listed and unlisted equities). I do not think that those who take decisions on DB pensions should exchange their pension funds for a bulk annuity because the price of doing so is low. I can see why “buy in/buy out” seems a bargain, but I think that DB pensions should run on and not sell-out.

John Healy and Andy Burnham must set out on October 28th, a budget that expresses confidence in Britain’s ability to grow. Our DB pension schemes must show that we can run them on and find ways to make them part of the solution to under-investment in British stocks. We must feel confident enough in out own pensions not to cease investing. We need not  purchase annuities, tempting as it might be for those of my age with money in the pot.

Whatever the temptation to lock-in, we need to invest for the long term and that is why I see the future for DC pots as they start paying a retirement wage as flex and fix or retirement CDC. Why I see the long term future of workplace pensions as not DC savings but collective pensions. We need to use pension funds capital for investment for growth not for purchasing annuities where much of our money goes abroad and into private credit.

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The opposition pension team’s complete now Peter Bedford’s appointed as shadow pensions minister

Posted on September 3, 2026 by henry tapper

 

Helen Whately, Andrew Griffith and now Peter Bedford are in place, they are three appointments that I hope will motivate the  Labour Government to work hard to resist. If these three made it to Government, it would be bad for pensions.

I have written recently of my distaste for Andrew Griffiths, his flirtation with Reform but worse with Liz Truss and her disastrous Chancellor. I have written of Helen Whately, who I think has little grasp of what the Pensions Act is about and no interest in collective pensions.

Now we have a new shadow Pensions Minister in Peter Bedford MP.

The man who brought us this clause last year – now shadow Pensions Minister!

This was posted back in November 2025 when the Conservatives were looking to find something to rival Collective Pensions and the Pension Schemes Act , this did not quite make the grade.

David Robbins’ sarcasm is latent but ill-disguised

Despite this, Peter Bedford has been promoted to shadow pension minister and no doubt he’ll be making appearances at a Conference near you.

We have had some decent conservative pension ministers in the lower chamber. Starting with Guy Opperman, succeeding with Laura Trott and with one or two blips, ending with the charming Paul Maynard. Of these , only Laura Trott remains in parliament and she’s shadow Secretary of State for Education. In short, we had some respect for our conservative pension ministers . Guy and Paul hang around, Paul has a nice piece in Prof Pens tucking into Andy Burnham whose a fellow man from the north west. A Tory Blackpool MP – now there’s a thing!

 

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Why more than three quarters of large employers are “exploring CDC”

Posted on September 2, 2026 by henry tapper

I know we have had this report for nearly a month but it amazes me every time I read that number. Here’e Gallagher’s boss speaking to Corporate Adviser

More than three quarters (76 per cent) of those in the pensions industry are assessing, exploring or expect to explore collective defined contribution within three years, according to a Gallagher survey of 250 employers, trustees and pensions professionals.

Around half (52 per cent) of respondents said that they would be comfortable being an early adopter of CDC. Additionally, 53 per cent claimed that they would be most likely to consider a multi-employer or master trust CDC arrangement.

Almost nine in ten (86 per cent) stated that a sector-wide CDC arrangement would be appealing. Among respondents working with schemes of fewer than 250 members, only 51 per cent are exploring CDC within three years.

David Piltz, chief executive of Gallagher’s benefits and HR consulting division, says: “While many in the pensions industry are already on board, including key individuals at employers, that alone isn’t enough: moving CDC from ‘interested’ to ‘implement’ will require winning over wider stakeholders – unions being a key example.

That is perhaps the most important win for CDC. Far from needing to be “won over” the unions who I speak to every day want CDC every time it’s presented as an alternative to defined contribution workplace pensions.

Of course, progressive advisers can see an opportunity here to explain to employers the pension advantages (and disadvantages) of CDC . The advantage is more pension , the disadvantage less freedom as to what to do with their pot of pension cash.

“For employers and trustees, the next step is to understand whether CDC could help address a specific pension challenge within their organisation. This means testing the model against workforce needs, existing pension arrangements, governance capacity, and the evidence needed to support a decision.”

All this as well of course, but you ask a C-suite executive of large employers with big workplace pension bills and they will tell you they don’t think they are getting value for money from defined contributions.

  1. Staff don’t see them as deferred pay and nor do their representatives – pensions do not reward.
  2. It’s money down the drain when it comes to collective bargaioning
  3. They can’t offer older staff the door with any degree of certainty they can afford to retire.

Workplace Pensions have been  low on the priority list for large employers as they struggle to meet bills from the trustees of their legacy DB pension schemes. That’s over now and they can get back to non-guaranteed collective pensions.

Workplace pensions are money paid to be compliant with auto-enrolment and there the interest runs out. Until now that is. Now over three quarters of employers find collective pensions more exciting than what they’e paid since they made their DB pension plans “paid-up”.

This should not be a surprise but it is. That’s because I forgot how exciting collective pensions (CDC) can be. Thanks Gallagher for reminding me!

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What about bulk transfers from DC to Collective Pensions (CDC)?

Posted on September 2, 2026 by henry tapper

This is a tricky question for everyone and I will not give it full justice in a short piece, but let me explain the issue.

We know that the pensions market is dependent on inertia. The success of pension schemes relies on people not opting out. Much of it is compulsory, you have no choice whether you are in the state pension, there is no opt-out and much of workplace pensions relies on auto-enrolment and a variety of defaults on contributions , investments and (in future) on how your money gets paid back to you.

But importantly for pension advisers including actuaries and lawyers  is the right to do your own thing and exercise your capacity to spend your money as you like. This is what is meant as pension freedom and it has underlined thinking on accumulation for the last twelve years.

With CDC (or collective pensions as I’ll call it in this piece) the opportunity to opt-out is a little more tricky, you have to encash a right to a pension and return it to a pot of some kind. In this there is the question “am I getting a fair transfer value” , “who’s calculated it”, “how can I measure it’s Value for Money”. In short, it has the difficulty of DB transfers.

Which is why I suspect many transfers are going to have a lot of difficulty with people taking their DC pots and transferring them into CDC plans to get paid either immediately or (more likely) later, a CDC pension. That’s people choosing to take the transfer of their own volition. Trustees have to ask the questions in the previous question or have some assurance they will not be criticised or even sued for allowing the transfer to happen.

If sanctioning voluntary transfers is hard, how much harder may bulk transfers made without the consent of savers be? Here there needs to be strict protections of trustees and clear protections for members so that they understand what is happening. There are all kinds of problems for members who will find access to their cash restricted to the tax-free cash allowed (which will generally not be exactly 25% of the transfer value). Members will find the dashboard pension they see from their collective pension different from the pension estimated for their DC pension. It will be quoted going up by inflation and that’s against a level pension from DC. Actuaries tell me that up to a half of the value of the collective pension is in the increases.

In short, it is easy for a DC schemes’s trustee to argue that bulk transfers are just too hard and dig in the heels. This may not be possible without a lawyer explaining the reasoning but this could happen.

So what rights have employers to demand a bulk transfer happen? Well if they are sole sponsor of the DC plan, then they can exercise their right to wind it up and have the individual pots swapped for collective pensions. That will take time but it looks a last gasp measure. Much more easy, an opt-out for money to stay in the DC plan or transfer to another one if requested with a bulk transfer only for those who are driven by inertia.

There is another wrinkle here. What if the employer participates in a multi-employer DC (aka a mastertrust)? Some of these large schemes such as Nest and People’s Pension will not sectionalise the employer’s contributions and recognise any right on the employer to have “their staff’s money” as a bulk transfer. I suspect there are several others. Here I see there as being very little chance that trustees should allow bulk transfers to be paid for active members working for the requesting employer. I would see it even harder for trustees to justify an employer’s request to transfer the pots of those who have stopped contributing (deferred).

But there’s another deal made by master trusts where there are terms unique to that employer and usually rights given that a bulk transfer can be made to another scheme at the employer’s request. Here the question is whether “the other scheme” includes a collective pension” and this brings us back to the start of this piece.

TPR/DWP

I am seeing DWP and TPR this month. I’ll ask them. I think they could have 3 answers to demands for such consolidation  – yes, no and maybe!

  1. Trustees have enough guidance to make their own decisions – maybe
  2. Trustees don’t have enough yet and we’re looking to develop more guidance and even law to ensure consolidation happens when employer’s require it – yes
  3. We don’t see why DC pots should be consolidated into CDC and will protect DC trustees (and maybe even DB scheme trustees) – no

I’d be interested in your views either by mail (henry@pensionsmutual.co.uk) or in the comments section of this blog.

 

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Lets see the challenging “CDC” collective pensions given some air!

Posted on September 2, 2026 by henry tapper

A good article from Alex Levey and Professional Pensions which we at Pensions Mutual will discuss and take onboard

Trustees should prepare for changes to governance and decision-making from collective defined contribution (CDC) arrangements, Zedra says.

The pension service provider highlighted the new responsibilities which will be required of trustees, including decisions affecting member benefits, with client director Sam Burden saying they will be faced with complex decisions, balancing

“different forms of risk and fairness between generations and the long-term sustainability of the scheme”.

“CDC has significant potential, but its success will depend on more than scheme design alone. As the UK CDC market develops, trustee boards should consider whether they have the right governance, experience and perspective to meet the demands of this evolving landscape. Preparing now will put schemes in the strongest position to make balanced, well-informed decisions when it matters most.”

I am blogging separately about the decisions from the Trustees of DC Pension Schemes. This is potentially contentious and further clarification of how members can be transferred from DC to CDC without consent is important.

Where is progress to delivering CDC in 2027 coming from?

We think there’s a market in preparation (there may be five Proprietors working on delivery)

To suppose that this summary of the market so far is complete would be a mistake but it is a mistake that is being accidentally made repeatedly. This is what we need to challenge at this stage!

TPT Retirement Solutions announced its intention to enter the multi-employer CDC market, targeting authorisation by the end of 2026 and launch in 2027. Aon also announced plans last month to introduce a multi-employer CDC section within its master trust.

Aon has announced that it intends to start trading (if authorised) in 2028, TPT is getting ready to get authorised as are the two challengers. It is easy to suppose that because these two established companies have had a master trust authorised , the UMES CDC authorisation will follow.

I was disappointed that the article ended without mentioning either “challengers”, Pensions Mutual and Arboreum Pensions (we believe launching as Collective Pensions Limited) whose intention is to ease congestion and widen choice for employers moving from DC to CDC in 2027.

We challenge whether four schemes should be reduced to two because two do not make such frequent and well drafted press releases.

But to leave it in no doubt. The Press has publicised both Adrian Boulding ,  and myself and colleague Chris Bunford this year.

In a recent survey of pension managers , there was a complaint that there was too little noise from the would-be proprietors of CDC schemes (their trustees cannot market their scheme).

To make it clear, we  like being quoted by the likes of Professional Pensions, Corporate Adviser and the Trade Press in general. We hope that they will ask us for our opinion rather than relying on press releases!

The market is bubbling under as it must till more collective pensions have been authorised.  As a mutual , Pension Mutual needs to listen  to as many potential employers, unions, advisers and pension trustees as we can and  Sam Burden’s comment is welcome.

The only way we can ensure  we meet the demand for collective pensions is by listening to the organisations that want to use us and their staff who will be members!

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The leaseholder’s hopes of freedom are rekindled by Andy Burnham

Posted on September 2, 2026 by henry tapper

Good news

Leasehold is THE ultimate subscription scam.

On his first day taking questions from the despatch box in Parliament as Prime Minister, Andy Burnham promises Barry Gardiner MP, the stalwart of leaseholders and a fan of this campaign, asked that a Commonhold and Leasehold Bill will be coming forward in this parliamentary session.

The Prime Minister promised that a refreshed Bill will be brought to parliament and enacted by this Government as part of his cost of living initiative.

On Tuesday night (September 1st), the serfdom lobbyists will be stressed out strategising how to close this momentum down.

A momentum we never really had with Keir Starmer.

But what happened here was no accident.

The support for Free Leaseholders helped make it happen.

We have been fighting to keep this agenda politically salient as Starmer departed and Burnham took over government.

Last month, Harry Scoffin penned a piece for LBC setting out some quick wins available to a new activist Prime Minister keen to demonstrate he is in touch with public opinion and take on the cost-of-living crisis by going beyond the dud Commonhold and Leasehold Reform Bill published by Starmer in January and actually freeing leaseholders.

Burnham is directly involved.

Read Harry Scoffin’s article now:
ANDY BURNHAM IS TOO GOOD A POLITICIAN TO LEAVE LEASEHOLDERS HANGING
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