We will get VFM when IGCs and Trustees are independent.

Posted on March 24, 2026 by henry tapper

This blog argues that advisers have no business interfering in the IGC’s and Trustee’s analysis of VFM.

Jonathan Parker: Value for money back under the spotlight

I have since their formation in 2015, thought IGCs in the pocket of the providers who pay the wages of their “independents”. In all the time that red amber and green has been declared by IGCs, we have only seen one “red” ever declared by an IGC chair. That was the Virgin IGC’s reports from 2018 to 2020 .

How independent are IGCs and commercial pension trustees?

I am pleased to see that TPR has issued in its CDC code a requirement that Trustees do not act to promote the scheme to anyone, including the regulators.

CDC (Phase 2) Code – Consolidated modules document

The trustees are prohibited from conducting any promotional or marketing activities on behalf of the scheme. However, they are not prohibited from meeting with prospective and existing employers to provide factual information regarding the scheme or general information about how a CDC scheme operates. This would include details of the following:

  • number of members and assets under management
  • details of how the scheme is administered
  • how they interact with the scheme proprietor and monitor the effectiveness of the scheme’s governance

  • differences between a CDC scheme and a DC scheme

Trustee meetings with employers or prospective employers do not need approval however the use of any promotional/marketing material is prohibited for these meetings

For multi-employer CDC schemes only, the following must also be included with the application

  • a statement signed by the trustees of the scheme confirming that no trustee promotes or markets the scheme or acts as the chief financial officer of the scheme

I hope that this will equally apply for Trustees and IGCs in time and that they will be empowered to say what they see not what they are asked to say by the people who pay them.

How independent are consultants?

Already we have consultants advertising their capacity to help trustees and IGCs carry out their duty. Who pays these advisers and what are the adviser’s motives?

If every report renders the scheme or personal pension plan VFM, where are those aren’t?

I do not say that Jonathan Parker of Gallaher is planning to help his clients to declare their GPPs , master trusts and own trusts as delivering VFM. But I am quite sure that we will see with DC schemes and maybe in CDC schemes to come, advice that ensures that everyone is in a narrow band of outcomes that ensures that no-one gets closed down.

And here we will see herding to what TPR and the FCA determine VFM. If what is required is to determine what the schemes and groups of plans have delivered, it is fairly easy to work out how people have done. Take the entire data set (millions of data points) and work out the Internal Rates of Return of all the savers in a DC plan (there are well over 10m of them in one master trust).

That will tell trustees what has happened and from there they can determine (against a benchmark) whether the scheme or group of personal pensions has delivered value.

You do not need an adviser to work out how people have done, you need good data managers and a system that benchmarks how your members and policy holders have done against the average return for these people.

You do not need an adviser nor do you need advice. If you have the results of the data analysis you’ve commissioned on you people’s experience, then you can say with certainty if you have or haven’t delivered value for money.

If you don’t use data but depend on advice , you end up with this twaddle, which we’ve had for 10 years from IGCs and Trustees

Even if I use the Corporate Adviser “Cap data” , I can get a proxy for the proper way. It shows that some schemes and group of plans have done well, some have not. Some of the plans pre-date the start of Auto-Enrolment in 2012, some started recently but all have data which should give trustees and IGC members the answer to the simple question

“Have our savers got value for money”

The answers that we are looking for right now are not about pensions but about saving for them. When we start measuring VFM for pensions then we will be faced by the Government’s claim that CDC delivers up to 60% more pension than a DC pot.

We long ago stopped expecting members to read an IGC or TPR report;  employers aren’t interested either. They are not considered a true report on Value for Money. VFM reports are now just for regulators (and advisers).

Posted in pensions | Tagged , , , , , | Leave a comment

I know I shouldn’t laugh but I did – sympathy for Iranian people

Posted on March 24, 2026 by henry tapper

There is something to laugh about in everything and this cartoon is the way Iranians are finding to laugh about the horror that is happening in the Middle East.

We have seen what is happening to the people of Iran before, it is what happened to the people of Gaza and the people of Ukraine and what they all have in common is that it is people who have no part in the quarrel who pay its price.

I find this cartoon funny as it feels like a reaction from the Iranian people, not its leaders and any moderate people around the world are brought to sympathy with them.

 

 

 

Posted in pensions | Tagged , , | 2 Comments

Higher payroll payments for deferred pay; Webb and Bell should work together

Posted on March 23, 2026 by henry tapper

In a recent talk to the Association of Member Nominated Trustees, Steve Webb was savage about the lack of progress in pension policy. Thanks to Callum Conway for this report last week

We need the straight talking of Webb on contributions and that of Bell on deferred pay if we are going to get employers to take pensions seriously again.

Here’s  Webb

2020s have been a ‘complete waste’ for pensions policy – Webb

The 2020s have been a “complete waste” for pensions policy, LCP partner, Steve Webb, has said, arguing that the failure to build on auto-enrolment (AE) risked leaving future retirees with inadequate incomes for years to come.

Speaking at the Association of Member-Nominated Trustees (AMNT) Spring Conference, Webb said projections for future retirement incomes showed the decline of defined benefit (DB) provision was still outpacing the build-up of defined contribution (DC) savings, meaning overall outcomes were set to weaken before recovering.

Setting out his view of the long-term outlook, the former Pensions Minister described the projected fall in DB income as the “ski slope of doom”, as successive cohorts retired with fewer years of DB accrual and smaller average entitlements.

Although DC saving is expected to grow as AE matures, he warned it would take many years before it filled the gap left by the decline of DB.

Therefore, Webb argued that “the 2020s had been a complete waste”.

He added: “We’ve achieved nothing in pension policy in that 10 years in terms of the thing that really matters, which is the size of the pension.”

Webb argued that, while AE had succeeded in bringing millions into pension saving, policymakers had then “wasted a decade” by failing to move ahead with contribution increases.

Webb suggested the government’s new Pensions Commission now represented the main opportunity to reset the agenda, particularly if it set out a post-2029 timetable for higher pension contributions.

However, he expressed frustration at the limits placed on the commission’s remit, noting that it was not expected to consider issues such as the triple lock or pensions tax relief.

Alongside this, Webb argued that ministers should think more broadly about how short-term savings and pension savings interacted, warning that some lower-paid workers could be pushed into debt if pension contributions rose without greater flexibility.

He pointed to ideas such as sidecar savings as one way to balance short-term financial resilience with long-term retirement savings.

Webb also suggested that official estimates of under-saving may understate the scale of the problem, particularly if the triple lock is eventually weakened.

He stated that the state pension currently played a crucial role in underpinning retirement incomes and reducing inequalities, whereas a greater reliance on private pension provision risked reinforcing gaps, including those between men and women.

In addition to adequacy concerns, Webb highlighted the implications of an increasingly consolidated DC market, arguing that the rise of pension megafunds could leave too much influence in the hands of a very small number of decision-makers.

While he acknowledged that larger schemes may be able to deliver scale benefits, he cautioned that the sector risked drifting towards “groupthink” and a lack of challenge unless governance kept pace.

Looking further ahead, Webb said he expected contribution rates to rise over time, more innovation to emerge in post-retirement solutions, and technology to play a bigger role in helping savers navigate increasingly complex choices.

He also stressed that stronger defaults would remain essential, arguing that the system could not rely on individuals becoming ‘pension experts’ to achieve decent outcomes.

More money spent on deferred pay

Had I been in the room, I would have been nodding assent, it is nearly 10 years since we considered a mandatory increase in minimum AE rates and we are still awaiting movement from Government over enactment of the proposals (which should be happening now- the middle of the 2020s).

What we have got is a movement towards workplace pensions being considered deferred pay and I suspect that this is the most realistic way for employers to voluntarily increase contributions for those engaged in saving for their retirement.

The movement towards guided retirement from DC and better still CDC pensions , replacing DC and supplementing it (Retirement CDC) is a start.

But it will take member representatives (mainly the unions) to demand that pension contributions are presented to staff as deferred pay and for the setting aside of pay , leads to a better understanding of what their deferred pay will be.

I suspect that this is what this Government is trying to do right now . But the Pension Schemes Bill and CDC legislation are  not enough on their own. We need to sort out adequacy by improving the conversion of contributions to pensions and we need employers to commit  more to deferred pay.

Torsten Bell – Pension Minister

 

Posted in pensions | Tagged , , , , , , , | Leave a comment

Gilts back on the naughty step

Posted on March 23, 2026 by henry tapper

Thanks to Katie Martin of the FT for this striking assessment of the state of gilts. Those readers who run schemes primarily invested in gilts will find this interesting as will many readers who watched in horror in October 2022. Were hedge funds part of the solution then? Are hedge funds providing a market today?
‌
 ‌

One of the most striking market moves last week was in UK government bonds. Gilts tanked on Thursday, led by the shorter maturities, after traders and investors caught a sniff that the Bank of England is leaning towards raising interest rates, not cutting them as it had indicated before the war in Iran kicked off.

The facts changed and the Bank changed its mind. No shame in that. And it has not committed to any particular course of action from here. But all the same, the scale of the hit to gilts was just enormous. On Thursday, the two-year yield added 0.3 percentage points (!). Lots of countries’ bond markets are shifting, but no one does it quite like the Brits. German Bunds and US Treasuries added about half of the UK’s extra slug of yield that day. On Friday, it got worse, somehow; gilts added another 0.2 percentage points or so. A contact of mine texted me Friday afternoon with one word: “HELP”.

The market had taken one cut off the table going into Thursday’s BoE decision. But now it says there is an 85 per cent chance of a rise in April, making it three rises fully priced for this year and a chance of a fourth. Seriously? In an economy that grew 0.1 per cent in real terms in the fourth quarter?

It is worth asking why the gilts market has become the global whipping boy. Our indefatigable colleagues on the news side did just that on Friday. Here are some additional thoughts:

One: The long, dreary shadow of Liz Truss and Kwasi Kwarteng. It may sound slightly silly, three and a half years later, to keep blaming late 2022’s mini-budget of mass destruction, but gilts investors, particularly those outside the UK, still cite it to me as a reason for additional caution in this market.

Two: Picking off the stragglers. As I wrote in my column for the weekend, the UK does have certain vulnerabilities around debt levels and fiscal wriggle room that other big economies don’t have, or at least not on the same scale. If anyone can make stagflation happen, the market is betting it’s the UK.

Three: Blame hedge funds. They are an easy target, but let’s unpack that idea: First off, it should be noted that sovereign debt management offices around the world actually like hedge funds. They have a bad rep, but actually the hedgies show up when debt is issued, they often act quite similarly to so-called “real money” (insurers and pensions), they provide liquidity to secondary markets (which was particularly useful in the “mini”-Budget shock of 2022). Also, they help to make up the void left behind from certain types of pensions that are just not hoovering up long-term debt in the same way any more.

As the OECD noted in its big debt report the other day, “price-sensitive” investors are an increasingly important part of the investor base in both government and corporate debt markets. On that front, hedge funds are right up there. Here is a nice OECD chart that maps various buyers’ tendency to hold bonds to maturity against their appetite for long-duration bonds and their sensitivity to price:

Salman Ahmed, global head of macro at Fidelity International, told me this may be a problem when markets get tricky, as they clearly have done here.

“The composition of the gilts market has weakened,” he said. “There’s a lot of hedge fund participation and the price is paid in periods like this. The market function is under stress.”

If Salman’s right I’m still not sure there’s much we can do about this. Like basis traders in the US Treasuries market, hedge funds may be flighty but we’d miss them if they were gone.

Posted in pensions | Tagged , , , | Leave a comment

TPT on the VFM podcast (DB, DC , mastertrust, superfund and CDC)

Posted on March 23, 2026 by henry tapper
Phil Smith
Ruari Grant

I think I deserve a medal for lasting the full 83 minutes + of this blog  but I did and though it didn’t talk about what I wanted to know more about (CDC and superfunds), it was good to hear about the set up at TPT.

What surprises me about TPT is that they are doing so much. They have revamped their DC master trust to allow members to get flex and fix style decumulation and will be bringing in a new approach where members will be able to be paid an income till they are 95 and then get a lump sum from what’s left over (typically to pay for care).

There is also an UMES CDC being launched in 2027 (subject to authorisation by TPR) and talk of a retirement CDC plan at the back of the decade. I am really pleased that TPT are doing this, there are very few organisations willing to be proprietor of a whole of life CDC and employers really need access to an authorised UMES CDC.

Then there is the DB business that is primarily legacy and a master trust for DB schemes who want to be under an umbrella.

Andy O’Regan , an actuarial strategist, runs the CDC side of things but sadly was not on the podcast with Phil Smith and Ruari Grant so we didn’t get much discussion of the topic , but we are promised more at a later stage.

I must say it would be interesting to hear not just from TPT but from the Church of England who will be launching a similar “UMES” CDC Scheme and the mysterious Orca, who are said to be launching a superfund for DB schemes.

What is clear is that TPT spend a lot of time with the Government discussing all these things and Ruari is the spokesperson, dealing with formal responses to Government while others get involved with matters more strategic to the TPT business.

It was interesting to hear from Ruari that he’s up and about , despite a crushing break of his leg which has laid him low. I saw him briefly in Edinburgh but too briefly to commiserate properly.

It was also to hear from Nico that he’d spoken to a number of DB schemes at the Pensions UK conference who are looking to launch a DC scheme within their DB trust to efficiently deliver surplus to members disadvantaged by not getting a DB pension. I wondered if any of these employers were considering running a single employer or UMES CDC scheme within the existing scheme. The surplus can be useful in offering the reserve that is needed for a CDC proprietor to get the scheme authorised.

The main subjects of the meeting surrounded VFM and the Size considerations DC plans must have in future. It is certainly ambitious for TPT to run a CDC scheme (not subject to size) , a DC master trust (subject to VFM and size) a Superfund , a DB master trust and an umbrella for existing DB schemes (which I didn’t quite work out).

But the lads clearly had time on their hands and the pod neatly fitted into the 90 minutes of the League Cup Final which I could watch with the sound turned down. Arsenal will now be able to focus on a smaller number of competitions, perhaps a lesson there for others?

Posted in pensions | Tagged , , , | Leave a comment

What matters most to people about the state pension?

Posted on March 23, 2026 by henry tapper

Torsten Bell has tough choices to make on the state pension.

The state pension age matters to everyone still to get it.

I  worked most of my life expecting to receive my state pension when I’d be 65; I’d be a pensioner in 8 months time had that conjecture held true. But my state pension age increased to 66 and then a 2020 review raised it to 67 so I have two years to wait.

I can put up with it, I’m still working and can balance not being a pensioner against having another 25 years to live (I live in a posh place). But not everyone is as lucky as me; people in Oldham have seen their life expectancy fall over the past few years. For one reason or another, many people in poor areas do not receive the full state pension.

Why should I expect the same pension when I’ll receive it for a longer period and have had the chance to save all my life into personal and company pensions? This opportunity has meant I’m doing well.

Shouldn’t what the state pays out be based on people’s means and how adequate their pension is?

Should I have the same state pension age as someone my age in Oldham?

These are the kind of questions Baroness Jeannie Drake has to consider as she conducts the first part of her Pensions Commission’s study into adequacy of income in later life.

If we followed Australia, we would have a means-tested state pension which would only be paid to those with little or no income in later life; but this would complicate things still further. This chart shows how many state pension ages those in their fifties and sixties could have had; try means-testing that!

​​

We still have Baroness Rolfe’s suggestions on an increased state pension – ignored by the last Government and we have suggestions to come on future state pension ages from Dr Suzy Morrissey.

How much more complicated could this chart become?

The rate the state pension increases matters most to my 93 year old Mum

It is amazing that four out of five people swapping their pension pot for an annuity don’t buy and increase to the lifetime income they buy

Though we seem obsessed by the rate of increase of our state pension, we are still four times as likely to buy a pension with no increase in payments than one linked to a formula for increasing!

​​

Sourced by Retirement Line https://www.retirementline.co.uk/blog/analysing-the-fca-annuity-data-for-2024-2025/

This brings me to my central question.

” Does the state pension age matter more than future  increases?”

I think that people’s attitude towards pensions in general but the state pension in particular is based on immediate need. Annuities, like the state pension, are judged by the income they pay at the outset.  People engage with the payment today, not future increases in the state pension.

The most important thing to most people is when it comes into payment. You don’t have to go back far in time to remember WASPI and the delays women suffered when their expectation of a state pension age was 60. The Government’s lesson for today is to keep people informed of why changes are happening and manage expectations.

As far as increases to state pensions, I suspect that people lock in to the current rate of state pension and imagine it as what they get, increases are a bonus because people expect pensions (like annuities) to be level. They like the certainty of the state pension.

For that reason, Torsten Bell is hinting that he will drop the one of  the triple locks – reducing pension increases. Meanwhile he hints he won’t support the most drastic proposed increases in the state pension age.

Of course there are exceptions, my Mum (now a pensioner for 34 years) is very interested in pension increases! But pensioners, despite being good at voting, are not as productive to the exchequer as we workers !

If the Government is constrained,  then it is better to freeze state pension ages than to continue triple-locked state pension increases.

 

Posted in pensions | Tagged , , , | 1 Comment

Could the triple lock be scrapped… and should it be?

Posted on March 22, 2026 by henry tapper

Industry veteran HENRY TAPPER gives his verdict

By HENRY TAPPER

Henry Tapper is a retirement industry veteran, chairman of pension research firm AgeWage and president of Pensions Mutual.

The Pensions Minister Torsten Bell is hinting that he will drop one of the elements of the triple lock, potentially reducing future pension increases.

Meanwhile, he also hints he won’t support the most drastic proposed increases in the state pension age.

If the Government is constrained financially and needs to choose, then I’m not hinting – I am going to say it outright.

It is fairer to freeze state pension ages than to continue triple-locked state pension increases.

Henry Tapper:  Not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall

Henry Tapper:  Not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall

Under the triple lock, the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent, and the Government has promised to stick to this for the rest of the current parliament.

The state pension age is going to start rising from next month from 66 to 67, in a gradual process that will take place over the next two years.

The timing of the next rise to 68 is officially up for review again, and after that what happens is unknown.

But the Institute for Fiscal Studies and other think tanks and experts are warning that without reform of the state pension triple lock, the retirement age will have to go up faster.

The IFS says to 74 by 2069, affecting people now in their 30s and younger, but others think the age jump and rate of increase might need to be even more radical.

What matters most to Brits about the state pension – the age they get it or the annual increase?

The state pension age matters most to those yet to get it, like me. The rate the state pension increases matters more to my 93-year-old Mum.

I worked most of my life expecting to receive my state pension when I’d be 65. I’d be a pensioner in eight months’ time had that conjecture held true.

But my state pension age increased to 66 and then a 2020 review raised it to 67 so I have two years to wait.

I can put up with it. I’m still working and can balance not being a pensioner against having probably another 25 years to live.

I live in a posh place. But not everyone is as lucky as me, and people in less affluent parts of the country have seen their life expectancy fall over the past few years.

Many people in poorer areas than mine also do not receive the full state pension, often because they did not work for long enough in the UK.

Why should I expect the same pension when I’ll receive it for a longer period and have had the chance to save all my life into personal and company pensions? This opportunity has meant I’m doing well.

Shouldn’t what the state pays out be based on people’s means and how adequate their pension is? Should I have the same state pension age as someone my age in a less well-off part of the UK?

These are the kind of questions the pension expert Baroness Jeannie Drake has to consider as she conducts the first part of the Government-sponsored Pensions Commission study into adequacy of income in later life.

If we followed Australia, we would have a means-tested state pension which would only be paid to those with little or no income in later life, but this would complicate things still further.

The chart below shows how many state pension ages those in their 50s and 60s MIGHT have had under the various independent reviews Governments have asked experts to conduct in recent years – try means-testing that!

The Government is required by law to review the state pension age every six years, so it has ordered two more reports which will look at when to introduce an increase to 68. How much more complicated could this chart become?

Freezing state pension age versus keeping triple lock

Older people understand the value of state pension increases but I’m not sure those just reaching retirement do.

It is amazing that four out of five people swapping their pension pot for an annuity as they retire don’t include any increase with the lifetime income they buy.

Though we seem obsessed by the rate of increase of our state pension, we are still four times as likely to buy a pension with no increase in payment than one linked to a formula for increasing!

This brings me to the Pensions Minister’s dilemma. Does the state pension age matter more than future increases? (That’s my phrasing of the questions he discussed in a recent debate in parliament.)

I think that people’s attitude towards pensions in general but the state pension in particular is based on immediate need.

Annuities, like the state pension, are judged by the income they pay at the outset. People engage with the payment today, not increases far in the future.

However, the most important thing to most people regarding the state pension is when it comes into payment.

You just need to think about the Waspi campaign, which was launched due to the delays women suffered when their expectation of a state pension age was 60, and is still ongoing.

The most important thing to most people regarding the state pension is when it comes into payment

The lesson the Government should learn from that is to keep people informed of why state pension changes are happening and manage expectations.

As far as increases to state pension payments go, I suspect that people lock in to the current rate of state pension – the full rate rises to £241.30 a week next month – and imagine it as what they will get.

Increases are a bonus because people expect pensions (like annuities) to be level. They like the certainty of the state pension.

Of course there are exceptions. My Mum, now a pensioner for nearly 34 years, is very interested in pension increases.

But pensioners, despite being good at voting, are not as productive to the Government as we workers.

If we must choose, it is fairer to freeze the state pension age than to keep the triple lock.

Posted in pensions | 3 Comments

The Death of the British Steel Pension Scheme – an obituary from David Boyd.

Posted on March 22, 2026 by henry tapper

David Boyd is a member of the NFOP British Steel Branch,  The National Federation of Occupational Pensioners has over 30,000 members and provides  a voice for people in retirement.

This is his obituary of his pension,  being a pensioner of the British Steel Pension Scheme. I publish it on his behalf

The Death of the British Steel Pension Scheme

The death has been confirmed of the British Steel Pension Scheme ( called hereinafter ‘Pen’) after a very long and painful illness involving many major surgical interventions.

Pen was born in Whitehall, London on 7 July 1969, the offspring of the union of his parents The British Steel Corporation, in 1967. He grew rapidly into a strapping adult, at his peak effectively managing assets of around £15 billion for well over 125,000 steel industry members and winning many national awards for his prowess.

Unfortunately, Pen’s parents hit hard times and, in 1988, they themselves were formally fully-disowned by the Government of the day and floated as a commercial limited company. Pen’s parents’ fortunes continued severely to decline, and in 1999 they merged with a Dutch steelmaker to form the Corus Group but this failed to halt the decline process resulting in the troubled Corus being taken over by the Indian-based industrial conglomerate Tata in 2007.

This acquisition proved a financial disaster for Tata too, who in March 2016 announced that Tata Steel UK had lost £2 billion in the preceding five years and that the company faced insolvency. Tata were then still responsible for Pen but applied to the Pensions Regulator to decouple their company from Pen on the grounds that continued responsibility for Pen in his present form would inevitably lead to Tata UK’s insolvency.

This led to Pen undergoing major amputations with the stated aim of ensuring his future survival without any support from Tata UK. The most significant of these was that pensioners with pensions earned before 1997 were barred from all future routine pension increases. Inflation-proofing increases generally were also significantly cut-down. Very many pensioners reluctantly voted for this surgery to happen as the only solution presented to them to keep Pen alive in something at least close to his present form.

The surgery took place but then Pen’s guardians stated their intention to kill Pen off provided his financial assets could be grown sufficiently to interest an insurance company in taking over his legacy in return for securing pensioner benefits (as revised) and creaming-off the almost-certain and considerable future financial surpluses  This they have achieved, and they put Pen to death on 31 March 2026. They have chosen to issue no obituary nor any celebration of Pen’s rather illustrious and notable life, so this attempts in some way to rectify that omission.

The outcome of all this is that former workers many of whom have spent a lifetime in often-arduous and dangerous work cease in any meaningful way to be British Steel Pensioners and to be members of a pension scheme that was run for their mutual financial benefit. Rather, they become merely a liability on the books of a vast insurance company.  Most cease to have any effective involvement either in the payment of their pensions or the wider community of pensioners.

To the author of this at least, that’s indeed a great big shame which has only benefited Tata Steel and the insurance company.

[end of obituary and comment by David Boyd]

Do the pensioners know what else was discussed?

I have asked David if he was aware as a pensioner of the choices that were looked at by the Trustees and by the sponsor.

Over the last few months, we have been fighting for employers , trustees and members to see an actuarial document called the TAS300. This gives the figures for the various alternatives available for the scheme
These include:
  • Buy in and buy out with an insurer
  • Transfer of sponsor (as Stagecoach recently did with its scheme)
  • Transfer to a superfund
  • Continuing with the existing sponsor
I’m not sure if you have ever heard of this document, let alone seen your scheme’s or been privy to the decision made and why alternatives were rejected (or perhaps not considered)

This is David Boyd’s response

No, wasn’t at all aware of the actuarial document you mention – and coincidentally one of my NFOP British Steel Branch colleagues mentioned only last evening the apparent lack of other options for the Scheme’s future.

Posted in pensions | Tagged , , , | 5 Comments

Pension Mandation and “the irrelevance of the Lords as a talking shop”

Posted on March 22, 2026 by henry tapper

Guy Opperman may not be a part of the Labour Government but he understands how governments work and why the protest from those arguing for fiduciary freedom will not be granted the amendment the House of Lords has sent downstairs

The following statement is from a friend who like Guy Opperman , knows Government well.

Guy Opperman is spot on right on this. Government will do what it wants.  They may or may not make some tweaks.

The triumphalism of the fiduciary duty/trustee crowd doesn’t matter one jot.   It could easily be counterproductive. Greater scrutiny of the merits and otherwise of fiduciary duty for starters. Or just skip that.

Nationalise AE making it what it is – funded social security. Freeing up all pension savings on top of that, but using the changes to cut tax and NI relief.

Well there’s a thought. I didn’t think the Pensions Minister held the “fiduciary duty/trustee crowd” in high regard at the Pensions UK conference earlier this month.

There was a lot of teeth-grinding following Guy Opperman’s realistic post. I include two examples. The first from Graham is just petulance and included as it represents the frustration who breathe the thin air at the fiduciary summit….

Tom’ s post suggests that the Labour Government may lose the whole Pension Schemes Bill in the ping pong of this amendment between Upper and Lower house of parliament.

I am surprised if this will happen, this Government has a big majority and the Pension Schemes Bill is one that is generally popular on all sides (putting “mandation” aside).

Guy Opperman offers little solace to Tom and to his private correspondents

To show that I’m not the only fan of Torsten and his bill and his support from the Chancellor…

This is a message from one of my friends

This is not a good time for industry special pleading, with the wider demographically driven outlook over the foreseeable next few decades.

It shows many things. The irrelevance of the Lords other than as a talking shop, often interesting, but essentially a retirement home. Where mysteriously people get paid to be residents.

The real problem is however not that they are ineffectual and waste resources but that we need a second chamber that does have the ability to have some effect.

The ABI, Pensions UK, IFS , PMI and endless pension professionals (including good friends) stand against mandation.  I’m not interested in this high-minded principle. I’m interested in getting things done – something we do very little of.

 

Posted in pensions | Tagged , , , , , , , | 2 Comments

DC offers flexible income while CDC provides deferred pay (the genius of Derek Scott)

Posted on March 22, 2026 by henry tapper

Here’s my friendly Scottish Accountant and Pension Trustee – Derek Scott, reminding me that for many people, the ideas of salary and pensions as “deferred pay” are old fashioned

I think, since Barber vs GRE in 1990, you’ll find that occupational retirement benefits are already considered “deferred pay”.

“Salary” now seems a rather quaint idea, a fixed, regular payment (typically monthly) independent of hours worked, allegedly offering more stability and salary-related benefits.

It’s not just employers in the “gig economy” who these days prefer short-term contracts and variable pay based on an hourly or daily rate, perhaps allowing for minimum hours and/or an element of overtime pay.

State pension offers a minimum (but inadequate) level of “income” in retirement, while one of the other features of modern-day retirement is that cash requirements may be lumpier and irregular and unpredictable.

This in turn may mean pot decumulation strategies such as flexi-access drawdown (some of which is still tax free) alongside optional insurance products very much still have their place.

This is very modern thinking from someone who could be thought a veteran! I think he’s right for many people which is why the ideas of DB and CDC pension don’t resonate with many people of the kind that Derek describes.

Which is why it is important that employer’s decide whether they want the old style pension (as public sector workers get) , CDC pensions – which mimic old style pensions but deliver as the market lets them or whether employees are encouraged to put money away for a later life that they can finance as they choose.

It’s nearly a year since I went to visit Derek in Fife and realised then that he thinks more deeply than almost anyone I know about what people want in retirement. Derek was Chair of Trustees of bus company Stagecoach and Railpen, the railway workers pension scheme. Here are workforces that I see at work a lot, men and women on busses and trains , driving me to schedules that they can often choose. There is increasing flexibility but I’d still consider they see themselves as salaried and their unions, Unite and RMT certainly value certainty of what they call the “deferred pay” of a pension.

There is a tremendous debate going on within unions on this subject and I hope a similar debate in the HR and Reward teams of employers (with pensions being discussed as a benefit not just a liability).

What seems most important is that we establish what options people are given to opt out of “deferred pay” pension arrangements and to what extent, a flex arrangement is promoted over a CDC. I think it could be argued that CDC is not appropriate for all companies but I think, before it is rejected, it needs to be understood, valued and only rejected if the price of freedom is considered worth paying.

We have seen a move in DB consulting to establish TAS300 as a way for an employer and trustees to consider whether to buy-out a pension with a bulk annuity or explore other options (which Stagecoach did with Aberdeen). There are alternatives such as superfunds for DB pension schemes but so far , little of the variety have been chosen to accommodate DB promises.

We should have a similar way to assess DC in its purest form as pension freedom, its halfway house of flex and fix and its deferred pay option, UMES and Retirement CDC.

This may sound hard, but relative to the choices of DB it is relatively easy to make choices based on an understanding of the behaviour and needs of employees. Even if employees appear to be contractors, most who work over time get rights as workers under auto-enrolment so it’s hard for companies to walk away from decisions that they will need to take.

The phrase “deferred pay” is the right one for DB and CDC while  ” flexible income” is the phrase I’d use of DC. They suit different workforces, what kind of workforce is yours?

If we can banish the minute detail of how flex and fix and CDC might work, then we can have a sensible discussion around retirement income as deferred pay or as flexible income.

Thanks Derrick for helping me to think this through. Thanks to Terry Pullinger for making it simple in my head!

CDC pensions such as that provided by Pensions Mutual, should focus on employers whose employees appreciate deferred pay while workplace master trusts may offer a choice to employers of deferred pay or flexible income.

This seems entirely sensible for unions, employers , consultants and providers as a discussion framework.

Posted in pensions | Tagged , , | 1 Comment