Annual DB pensions conference

This session covered practical questions around CDC schemes that culminated in a fantastic Q&A session with Peter Dickinson, Pension Director at the Church of England Pensions Board, who explained why his team are exploring how CDC might transform retirement outcomes for scheme members. 

The session started with LCP’s Steven Taylor and Helen Draper talking through recent developments in CDC and how the actuarial science works.   

The panel described how CDC compared to other types of pension arrangements and our belief that CDC could be: 

Better for members – by potentially offering 50% better outcomes compared to a DC scheme that annuitizes, whilst avoiding the difficult retirement decisions that currently arise for members who choose post-retirement drawdown 

Better for sponsors – by avoiding risks of deficits and being affordable within existing pensions budgets; and 

Better for society – by helping improve savings adequacy for future pension savers and being a natural source of pensions investment in growth assets. 

They also described recent industry developments and how we expect the market to develop over future years. 

They talked through some of the conclusions of our recent modelling work and research that supported these statements and Peter then concluded by talking through some of the work his team have carried out to date. 

Please let us know if you would be interested to hear more details of the session or if you would like a meeting with our CDC team to discuss how CDC could work for your membership or employee group. 

Nathalie Sims was joined by Robert Thomas (Law Debenture), Harus Rai (Capital Cranfield), Amanda Asante (IGG), Maggie Rodger (Co-Chair of the AMNT) and Helen Evans (TPR). This panel session addressed; growth of the Professional trustee (PT) market, Professional Corporate Sole trusteeship (PCST) and wider services offered by PT firms beyond pure trusteeship. 
The panel discussed three main areas of focus: 

1. Growth: 

• Whether strong levels of growth can be sustained.
• Whether every scheme needs a PT.
• If the right people are being attracted to the profession.
• How lay trustees can be equally as qualified as PTs. 

2. Professional Corporate Sole Trusteeship (PCST):  

• Debate around the growth of PCST and the shift in popularity for schemes of all sizes compared to traditionally for smaller schemes  
• Different models of PCST, new products being launched to support the smaller end of the market and bringing expertise from the larger end. 
• Transition to sole trusteeship is key and not losing the member voice essential, measures such as consultative committees can help this.  
• TPR expressed no concerns with sole trusteeship per se, but indicated they are changing the way they interact with PT firms, albeit they are currently in fact finding mode. 

3. Services outside of traditional trusteeship:  

• With growth, comes change and we have seen offerings by some PT firms expanding beyond traditional trusteeship.  Some wider services are governance related roles, e.g. secretariat and project management but we’ve also seen increasing M&A activity, with firms acquiring businesses to expand their offerings beyond those services.  
• We addressed conflicts of interest across different PT firms operating models and in line with the theme of the day the need to have ‘balance’. 

Nathalie’s three key takeaways from the session were: 

1. The world of trusteeship is becoming ever more complicated it’s clear that bringing in professional trusteeship adds value and is here to stay.  
2.  As we bring more professionalism we mustn’t lose the member voice.  
3.  And with what we have heard from TPR so far – let’s watch the Regulatory space as change is coming.   

This panel session, moderated by experienced independent trustee Carol Woodley, explored the wider aspects of insurance buy-in and buy-out transactions, in particular focussing on how they impact the member experience. 

While the financial aspects of buy-ins are now fairly well travelled, wider aspects such as data, operational matters, legal and communication challenges can be underappreciated.  

The market for insurance buy-ins has grown rapidly with business volumes rising from around £10bn pa to nearly £50bn. Such volumes look set to continue as trustees and sponsors look to better manage their pension risks. As a result, these wider processes have come under pressure, yet they are crucial for maintaining a positive member experience. 

The panel discussed these challenges, what you can do to manage them and walked through some practical examples. Key topics included: 

• Planning the post transaction process, including getting the operational setup right, setting out a clear member communication plan and managing your data cleanse process. An experienced, dedicated project manager is key. 
• Administration tips and tricks, covering how the administration process changes for your members during buy-in and then again at buy-out, operational processes to consider around member options and how insurer offerings can differ in areas such as web functionality. 
• What trustees should do with any surplus funds, discussing the factors Trustees need to consider when distributing surplus funds, how clear communications at an early stage can help and addressing some of the practicalities around the process. 

Richard Soldan chaired a panel session aimed at those involved in not-for-profit organisations, and looking at what current themes in the pensions world mean for them. The key focus of the session was on capturing opportunities, the balancing act between scheme funding vs using cash for charitable purposes as well as using pension assets for the greater good.   

Richard was joined by Kate Smith, CEO of Connexus, who talked through how she had taken advantage of current opportunities to exit pension schemes at historically low prices, reducing risk and enabling more equality in pension provision amongst the workforce going forwards. 

Keith Libetta, Chair of Trustees of the UNISON Staff Pension Scheme, also joined the panel. Keith told the story of his scheme’s journey to an improved funding position, focusing on the importance of collaboration between stakeholders.  

Jonathan Wolff from LCP’s covenant team explained how the new funding code is expected to impact not-for-profit organisations, and the balance between putting pounds into the scheme versus using them for the organisation’s purpose.  

Katie Berridge from LCP’s investment department outlined some of the options trustees have when looking to invest pension scheme assets responsibly. She emphasised the importance of choosing good investment managers as well as outlining other things that can be done such as impact investing. 

The session generated excellent discussion and participation from the audience, with lots of sharing of experiences and viewpoints.