Chris Potts’ Post

Like many people juggling the daily demands of life while managing a string of workplace pensions from previous jobs, I can see the clear benefits of the Government's proposed Value for Money (#vfm) framework and small pension pot consolidation. And now the #FCA has announced a joint framework with the #DWP and #TPR to standardise how value is assessed across both trust-based and contract-based schemes. In a nutshell: 🚀 Applies to DC workplace pension schemes 🚀 Aims to improve transparency, consistency, and competition 🚀 So that savers to get better value 4 key elements: 1️⃣ Firms must disclose investment performance, costs, and service quality. 2️⃣ Enables consistent assessment of value by IGCs and GAAs. 3️⃣ Mandates public disclosure of outcomes using a red-amber-green 📊 rating. 4️⃣ Requires corrective actions for arrangements rated red or amber (improve or ultimately protect savers by transferring them to better schemes) 📈📉 Simples? 🤔 The framework is expected to deliver better outcomes for pension savers by focusing not just on cost but also on investment performance and service quality. 🙌 What about the bigger picture? 👩🎨 This initiative continues the momentum from the previous Conservative government’s regulatory efforts, with a noticeable increase in pace. Earlier this week, Chancellor Rachel Reeves also announced a new regulatory regime for #ESG ratings agencies, further underscoring the government's commitment to enhancing transparency and protecting consumers (see link in comments below). Key themes are emerging: 🥁 transparency, 🥁 accountability, and 🥁 consumer protection across multiple sectors. 🌲It's another welcome development for those who get lost in the weeds... 🌲 What do you think about these new measures? Are they enough to ensure better outcomes for pension savers, or do you see areas that still need attention? For more details on the FCA's progress with the framework, check out their latest announcement here. Feedback by 17 October 2024 – please reach out to discuss. Margaret Meehan, Sarah Phillips, Eilidh Robertson, Caroline Stevenson, Lynsey Whelan, Lorna Stephen, Marianne Murnin, Fiona Greenslade https://lnkd.in/ed7STNUx 

How DWP might help us keep track of all our pensions.   After 30 plus years working in both the private and public sectors, consisting of several jobs of a couple of years and one of nearly 20 years, I found myself with 6 pensions that I knew about and their details. I had diligently updated my contact details when I moved homes, so continued to receive annual updates which included mergers and takeovers by different pension companies. Most of these pensions are small pots so not worth much, and one that will hopefully enable me live reasonably in my later years.   About a year ago, I worked with a financial advisor to get these in order and to establish what I had and how best to manage them. During this process which included contacting each pension company, I accidentally discovered another pension that I had forgotten about and lost track of. This one was worth a good chuck so important for my overall pension pot. So as thorough as I thought I was, I had lost track of this one. I suspect, I am not alone in this as most people are busy with work and family life and the process to update contact details when moving can be administratively heavy and this is probably lower down the list than sorting your banking, utilities, parking permit, and the many other tasks on the ‘to do’ list.   The current system doesn’t work unless you are either wealthy enough to pay for someone to do this for you or super organised. Most of us aren’t and apparently, there is £31.1 bn lying in unclaimed, inactive, or lost pension pots, according to new research carried out by the Pensions Policy Institute (PPI). This has led me to conclude that there must be a way to help us as individuals with busy lives, keep track of all our pensions, especially now as automatic enrolment has been implemented.   I am aware of various schemes that help you pool and track ‘lost’ pensions but to do this, you need to know and have the details for the pension company and or your previous employers, some of whom may no longer exist, or been taken over by another company.   One possible solution might be in future, when issuing someone's NI number DWP, could also issue them with a pension account number. This unique pension account number can then be used to log and track every pension that individual pays into throughout their working life. Most of us will have multiple employers so this could help by logging and keeping details of each pension by linking them directly to the individual via this pension account. It would also be easier to update change of address details and give us an overview of our pensions value in one place?   Perhaps this is all far too obvious or maybe there is a genuine reason why this wouldn’t work but, given the reality of most of us having several jobs, automatic pension enrolment, on going mergers and take overs of pension companies and ‘life’, the current process doesn’t work hence the increasing value of unclaimed pensions, so something needs to be done.

Earlier today, 28th Nov, 2024, Trustfund Pensions hosted a highly engaging Employer Forum, bringing together esteemed pension desk officers from various organizations. I had the privilege of presenting on two critical topics: "Accessing 25% RSA Balance towards Payment of Equity for Residential Mortgage" and "Self-Service Channels of Trustfund Pensions." Presentation Highlights: 1.⁠ ⁠Accessing 25% RSA Balance towards Payment of Equity for Residential Mortgage: The presentation highlighted the provisions of the Pension Reform Act (PRA) 2014, which allow Retirement Savings Account (RSA) holders to access up to 25% of their RSA balance towards payment of equity for residential mortgage. This provision aims to support homeownership for RSA holders. 1.⁠ ⁠Self-Service Channels of Trustfund Pensions: The second part of the presentation showcased the various self-service channels offered by Trustfund Pensions, designed to provide RSA holders with convenient and secure access to their pension accounts. These channels include: •⁠ TIVA: A Whatsapp platform that provides RSA holders with a quick and easy way to check their account balances and transaction history, generate statement, certificate of registration, check requirements for accessing benefit and many more. •⁠ ⁠Online Portal: Allows RSA holders to view their account balances, transaction history, and investment portfolio. •⁠ ⁠Mobile App: Enables RSA holders to access their accounts, make contributions, and monitor their investment portfolio on-the-go. •⁠ Social media handles: emphasize on the presence of Trustfund pensions on all social medias including X (Twitter), Instagram, Facebook, LinkedIn and Youtube. The presentation aimed to educate employers on the benefits and features of these self-service channels, promoting greater pension awareness and engagement among employees. Forum Outcomes: The Employer Forum provided a valuable platform for discussion, questions, and feedback. Key takeaways from the forum include: •⁠ ⁠Employers' increased awareness of the provisions for accessing 25% RSA balance towards payment of equity for residential mortgage. •⁠ ⁠Greater understanding of the benefits and features of Trustfund Pensions' self-service channels. •⁠ ⁠Opportunities for employers to promote pension awareness and engagement among their employees. Conclusion: The Employer Forum was a resounding success, providing a valuable opportunity for employer’s PDOs to engage with Trustfund Pensions and gain insights into the pension industry. We look forward to continuing our collaboration with employers to promote pension awareness and support the financial well-being of their employees.

UK government’s Pensions Dashboards Programme delayedhttps://lnkd.in/gEHtJWH8 UK government’s high-profile Pensions Dashboards Programme (PDP) is behind schedule due to ineffective governance and a lack of people with the right skills and experience, a National Audit Office (NAO) report has revealed. This has contributed to pushing the date for the new platform to be connected to providers to October 31, 2026, a year later than planned. Costs have also risen from £235 million ($295 million) in 2020 to £289 million in 2023, an increase of 23%. The Pensions Dashboards Programme (PDP) began life in 2019 under the newly formed Money and Pensions Service (MaPS). The project was ambitious: give 16.3 million UK pension holders a single dashboard from which they could view information about their private, workplace, and state pensions. Building such a platform was meant to address several barriers to pension planning. Tracking pensions has always been time-consuming, for instance, resulting in few making the effort. In other cases, people lose track of pension pots accrued through multiple workplace pension schemes. However, building a secure platform was always likely to be complex, expensive, and difficult to deliver as a project never attempted before. Falling short The PDP is designed to be a data platform rather than a single portal. That means the dashboard can be offered by pension providers connecting to the MaPS infrastructure or, non-commercially, by the Department of Work and Pensions (DWP) itself. According to the NAO, MaPS has lacked a range of management and technical skills to deliver the project on time, something the DWP was said to be aware of from the start. This made delays inevitable. “Once completed, the PDP could benefit millions of people by providing a secure, comprehensive and online point of access for information about their pensions,” commented NAO head, Gareth Davies. “However, delivery delays due to shortfalls in digital capacity and capability have pushed back the final deadline for pension providers and schemes to connect to the PDP by a year, with no date currently set for citizens to benefit.” Paying for skills The report documents how MaPS hired new skills but still ended up being dependent on a single provider, Capgemini, for the most important elements of the PDP platform. The NAO found that although the core PDP infrastructure was completed on time, this subsequently failed a DWP service standard assessment in 12 out of 14 categories. A problem was a lack of skilled resources to get the platform up to speed with a limited tolerance for staff turnover. “This, coupled with limits on the reward it could offer for specialist roles meant it was unable to fill vacancies in the program team for a sustained period,” the report said. In other words, it wasn’t paying staff competitive rates, which meant it kept losing people that were diffi

Pension funding, or more accurately advance pension funding, was not always a “thing.” As I explained in my prior posts, before the 1960’s, pensions were widely viewed as being established and maintained for the benefit of employers. Worker security (and therefore pension security) was not a concern. In the first half of the 20th century, employers did not always pre-fund their pension promises. Rather, the dominant approach was “pay-as-you-go.” The pay-as-you-go approach lost much of its luster, however, as pension promises began to mature at scale. Accountants and actuaries advising pension plan sponsors pointed out what is today obvious to even the most casual observer: the liability for the payment of a promised pension arises at the time of the promise and not at the time of payment. Pension plans are intermediaries—they stand between the pension promise and the pension payment. Pay-as-you-go schemes eventually gave way to the establishment of bookkeeping reserves. While bookkeeping reserves facilitated the payment of pension benefits, they did nothing to safeguard pension promises. In or about the 1920’s, some employers began to establish trusts for the purpose of paying pensions to retired employees. They also began purchasing annuities from insurance companies. Increasingly, companies saw a benefit to spreading the cost of an employee’s pension over a prolonged period of time. It was not until later that separate pension trusts became commonplace. This occurred not as a result of any worry over worker security, but rather only after wholesale changes to the tax code. The origins of the pension tax rules will be the subject of my posts starting tomorrow.  

The government has launched a consultation on introducing legislation that would expand the scope of collective defined contribution (CDC) pension schemes. CDC pensions, also known as “Dutch style” pensions as they are popular in the Netherlands, are a middle ground between defined benefit (DB or final salary schemes) and defined contribution (DC) schemes. DB schemes, which offer predictable payouts at the end of the scheme, are now generally closed to new members in the private sector, with many employers favouring DC schemes, where payouts are based on the investment performance of contributions. A CDC scheme has a target or ambition of what it will pay out, offering an element of risk-sharing between employer and employee and an extra level of guarantee for employees. Royal Mail introduced the UK’s first CDC pension scheme yesterday, and will provide more than 100,000 employees with both an income in retirement and a lump sum. Although CDC pensions have been authorised in the UK since 2021, Royal Mail is so far the only company to announce plans to launch one. The consultation, which runs until 19 November, seeks employers’ views on draft legislation that would extend access to these schemes, setting out what they must do to become authorised and to operate effectively. One idea is if companies “club” together to produce large CDC schemes, this could mean more investment is channelled towards UK infrastructure and start-ups. However, companies would need more detail on how this would work in practice and what protections might be offered. In August, there had been speculation that the Treasury could look into a Canadian pensions model, which consolidates a number of smaller public sector pension schemes into a “giant” pension fund that would reduce administration costs and potentially attract external investment. Research by Willis Towers Watson in 2020 found that CDC schemes could deliver annuities on average 70% higher than DC schemes and 40% higher than DB schemes. [Personnel Today] #employment #pensions

The Dashboard to Tomorrow: Navigating the UK’s Pension Transformation As we stand at the cusp of a digital revolution in the pensions industry, the UK’s Pension Dashboard Program (PDP) emerges as a beacon of transformation. With the regulatory deadline looming, let’s delve into the preparedness of pension firms, the challenges they face, and the competitive landscape of platform providers. a. The State of Preparedness: I believe most pension firms are still in the early stages of aligning with PDP requirements. The pause in the program in early 2023 led to a bifurcation in the industry’s approach. While some firms continued their development efforts, others took a step back. Despite this divergence, the “find and view member” functionality has become a common denominator across the board. Yet, hurdles such as data cleansing, architectural revamps, and API integration over legacy systems remain formidable challenges. b. The Call for Expertise: The PDP’s complexity is not just a technical puzzle but an operational labyrinth. The government’s mandate for the pensions industry to spearhead this initiative has amplified the need for domain expertise. Systems integrators and service providers with a deep understanding of the UK’s pension market are in high demand. The market is ripe for solutions that are not only compliant with mandatory changes but also seamlessly integrate with core enterprise systems. c. The Uncharted Territory of QPDS: While information on firms potentially launching Qualified Pension Dashboard Services (QPDS) is scarce, the potential for service providers in this space is vast. The industry is on the lookout for innovative solutions that can navigate the intricacies of the PDP. The competitive landscape in the realm of platform providers, MoneyHub faces competition primarily from those offering Dashboard Connector services. Here’s a snapshot of the competitive field: > Bravura: Their Dashboards Connect service offers secure and scalable microservices, enabling seamless connections within the pensions dashboards ecosystem > Equisoft: With Pension Fusion, they offer a robust system that can manage the demands of millions of users and also supports complex data management and regulatory compliance > Origo: Their Pension Dashboard Connector service, inclusive of Pension Finder and Consent and Authorization services, ensures secure and efficient pension management for users Looking ahead as we gaze into the future, the PDP stands as a symbol of progress, a digital conduit connecting the past, present, and future of pension management. The journey ahead is filled with opportunities for tech innovation, strategic partnerships, and a reimagined approach to retirement planning. Join the conversation and share your insights on how the UK’s Pension Dashboard Program is reshaping the pensions landscape? https://lnkd.in/gH6fjMUP #UK #Pensions #Pensiondashboardprogram #PDP Vigitesh Tewary Pranati Dave Ronak Doshi Aaditya Jain

The government has launched a consultation on introducing legislation that would expand the scope of collective defined contribution (CDC) pension schemes. CDC pensions, also known as “Dutch style” pensions as they are popular in the Netherlands, are a middle ground between defined benefit (DB or final salary schemes) and defined contribution (DC) schemes. DB schemes, which offer predictable payouts at the end of the scheme, are now generally closed to new members in the private sector, with many employers favouring DC schemes, where payouts are based on the investment performance of contributions. A CDC scheme has a target or ambition of what it will pay out, offering an element of risk-sharing between employer and employee and an extra level of guarantee for employees. Royal Mail introduced the UK’s first CDC pension scheme yesterday, and will provide more than 100,000 employees with both an income in retirement and a lump sum. Although CDC pensions have been authorised in the UK since 2021, Royal Mail is so far the only company to announce plans to launch one. The consultation, which runs until 19 November, seeks employers’ views on draft legislation that would extend access to these schemes, setting out what they must do to become authorised and to operate effectively. One idea is if companies “club” together to produce large CDC schemes, this could mean more investment is channelled towards UK infrastructure and start-ups. However, companies would need more detail on how this would work in practice and what protections might be offered. In August, there had been speculation that the Treasury could look into a Canadian pensions model, which consolidates a number of smaller public sector pension schemes into a “giant” pension fund that would reduce administration costs and potentially attract external investment. Research by Willis Towers Watson in 2020 found that CDC schemes could deliver annuities on average 70% higher than DC schemes and 40% higher than DB schemes. [Personnel Today] #employment #pensions

Parliamentary statement on the pensions dashboard: "The Government wants to shape the pensions system...as part of achieving that goal, we want to make it easier for people to understand their pensions information so they can better prepare for financial security in later life. As people often move around the labour market throughout their working lives, this can make it difficult for individuals to keep track of their pensions savings. To help solve this problem, the Government is committed to the delivery of pensions dashboards. Pensions dashboards will provide a secure way for individuals to view a summary of their pensions picture online, including information about the State Pension. This will help people find their lost pension pots and promote greater engagement – empowering individuals to plan their future more confidently. The Pensions Dashboards Programme (PDP), which is part of the Money and Pensions Service (MaPS), recently concluded a formal Reset process which generated a revised delivery plan. In line with that plan, the Programme has begun testing the connection journey with a small number of external organisations which will help facilitate wider industry connections. Alongside this, the PDP has published an updated draft Code of Connection, technical standards, and data standards to support the pensions industry to prepare for connection. As a result of the PDP’s progress, the Infrastructure and Projects Authority has increased its confidence in the Programme’s ability to deliver against their revised plan. While it is too early to confirm a launch date for public use, we are taking steps to help the public realise the benefits of using a pensions dashboard at the earliest opportunity. I have directed the PDP to focus its efforts on the connection and launch of the MoneyHelper dashboard service (provided by MaPS), before turning to the work of connecting commercial dashboard services. The Government supports the principle of enabling multiple commercial pensions dashboard services, which will provide savers with greater choice to access their pensions information from organisations they are familiar with, promoting greater engagement with pensions. However, in the interests of ensuring consumers have the best experience on dashboards, it is prudent to allow a period while only the MoneyHelper dashboard is operational. Prioritising the launch of the government-backed dashboard in this way will provide an opportunity to obtain better insights into customer behaviour and ensure greater confidence in operational delivery, security, and consumer protection before facilitating the connection of commercial dashboards. We are committed to the existing published timetable for the connection of pension schemes and providers to the pensions dashboards ecosystem, which is expected to begin in April 2025, as well as the overall connection deadline of 31 October 2026."

FCA looking to secure value for money in workplace pensions Considering the broader impact of the Consumer Duty Regulations, it's no surprise that the FCA is now looking (again) at value for money in the workplace pension sector. There are concerns that while regulations protect employees' right to join workplace pension schemes, are the default payment arrangements reflective of a changing workplace? The switch from defined benefits to defined contributions Many who follow the pensions industry will be aware of the switch to defined contributions rather than defined benefit workplace pension schemes. Many defined benefit schemes closed in the 1990s and early 2000s due to the growing cost and increased liability for employers. Going forward, the FCA proposes a traffic light system to assess arrangements within a value-for-money framework. There are concerns that some of the pension fund investment strategies of years past may not have been reviewed and updated and are, therefore, out of sync with the modern era and the needs of members. Concerns regarding fees are also emerging, with many of the old arrangements looking relatively expensive compared to the modern day. Fees, engagement and communication It's important to recognise that a value-for-money review of scheme arrangements will take into account fees and returns. It is not necessarily the cheapest arrangements that provide the best value, but it's important to find a balance. Looking at the broader aspects, a number of older schemes may not incorporate the latest engagement strategies and the use of technology for both communication and asset monitoring. Ironically, an emphasis on returns and updating investment strategies could actually see fees increase when measured against value for money. Summary Consumer Duty Regulations are impacting all areas of the financial services industry, and we now have yet another review of the pensions industry on the cards. It's important to recognise that this is not a race to the bottom with regard to fees; it's more of a balanced approach and an updated investment strategy for some of the older funds. Will it create a less innovative and more risk-averse industry? Time will tell.