Slides for a coffee morning - March 22nd

1. 5 matters that
should be
bothering us
Pension PlayPen coffee morning
Henry Tapper
March 2022

2. 6 pension issues
that should be
bothering us
today
• Inflation; what it means to current and future
pensioners
• The case for a retail CDC product
• Can we create a measure for VFM people can
understand
• LGPS where AVCs still make sense
• The 650,000 economically inactive over 50
year-olds
• What has Russia done for ESG?

3. Inflation and what
it means to
current and future
pensioners
• State pension rises by 3.1% in April
• Inflation currently at 5% - likely to rise to 8%
For Pensioners
• Pension credits,
• Around 850,000 eligible households don't claim
• Targets those hardest hit by inflation
• Can RTI be used to nudge take up?
• Will it get a boost from the Spring Statement?
For Savers
• Is now the time to put up national insurance?
• Is now the time to switch to salary exchange?

4. The case for a
retail CDC product
Longevity protection within
a fund not a scheme
The income is reckoned stable over a
given period if it lies at most either 5%
or 10% below the initial income in 90%
of future scenarios throughout
the period

5. Can we create a
VFM measure the
public can
understand?

6. LGPS- where AVCs
still make sense
• State pension rises by 3.1% in April
• Inflation currently at 5% - likely to rise to 8%
• Can we create a VFM measure the public can
understand?
• LGPS - Where AVCs still make sense
• The 655,000 economically inactive older
workers
• Has Russia made a mockery of ESG?

7. AVCs in LGPS
are a great
deal
• Commutation factors
• £1 of pension = £12 Tax
Free Cash
• £1 of pension = £20
towards LTA
• £1 of pension = £34
annuity (65)
• Tax Free cash is nearly 3
times as expensive as
buying an annuity
• AVCs bypass commutation
• £1 saved = £1 Tax Free Cash
• Example Under
commutation
• £12,000 TFC costs £1,000
pension
• But £1,000 pension costs
£34,000 on the annuity market
• Saving £12,000 in AVCs adds
£22,000 to your pension

8. A compelling case for
member and employer
1. A far more efficient way to take
tax free cash
2. Typical discount on contributions
33-53%
3. Typical on cost to saving to
employer 15% (pre costs)
4. Tax-free-growth doubles money
every 20 years
5. Reasonable choice of contracts
(though scope for improvement)
6. Plenty of net available income

9. AVC Contracts available
*Based on AgeWage analytics
Insurance platforms include Prudential 70%, Standard Life 15% and variety of
“others” including L&G, CMG, Zurich, Scottish Widows and Aegon
Fund options include With-profits, lifestyle and range of self-select
“conviction” funds
Member borne charges typically 0.65% + fund costs (typically 0.15%)
Extremely cheap to administer , high quality business to insurers,
investment/service proposition represents below average VFM *
Scope for further competition from master trusts

10. The 655,000
economically
inactive older
workers

11. Has Russia made a
mockery of ESG?

12. www.agewage.com
Henry Tapper
henry@agewage.com
07785 377768