This document introduces the concept of private third party pension sponsorship as a way to address issues in the UK pension industry. It notes that current industry approaches are failing to solve the widening savings gap or rebuild consumer confidence and trust. A new, innovative, consumer-focused approach is needed that provides extra funding, education, and flexibility while reducing risks. Private third party pension sponsorship could potentially improve financial outcomes for savers, tackle consumer negativity, and help address employer budget constraints by shifting some liability to the private sector.

1. INTRODUCING
PRIVATE 3rd PARTY PENSION SPONSORSHIP
PLEASE MIND THE GAP
For Professional Advisors, Employers & Trustees Only

2. IMPORTANT QUESTIONS
• Excluding the reliance on 2nd generation wealth, how
does the pension industry plan to solve the widening
savings gap?
• How will the industry re-engage consumers who
have lost all faith and trust in pensions?
• Has there been any real benefit from pension
‘improvements’ (switches) made in the last decade?
• Were these ‘improvements’ necessary and did any
valuable practical advice & education occur?

3. PAST vs FUTURE
• Final Salary schemes are closing
• DC Trust based schemes restrictive (admin)
• GPP’s impacted by impending RDR changes
• Is NEST really the answer or simply destined to
deliver yet more of the same?
• Is NEST a complete waste of £1bn?

4. INEVITABLE CONCLUSION
• In reality, successes are too few to identify
• Consumer confidence at an all time low
• Trust has to be rebuilt
• Consumer must be put first
• Innovation is essential; not more of the same
• Focus on the real enemy – ‘cost of delay’

5. KEY PENSION ANALYSIS
• Average Employer contribution 5.5%
• Average Employee contribution 3%
• Average term to NRD 22.8yrs
• Average pension fund value (1) £26,000
• Average pension fund value (2) £55,000
• Average scheme turnover 2-3 years
• Default fund cash flow 85% to 100%
(1) All pension plans, any size (2) Pension plans £1,500 and above
Source AEGON DC Group Pension Data

6. INCOME SHORTFALL ANALYSIS
ALL THINGS BEING EQUAL, THE VAST MAJORITY OF PEOPLE WOULD
LIKE TO RETIRE WITH 50% OF THEIR PREVIOUS WORKING INCOME
ON AVERAGE, WE ASSUME THAT A SHORTFALL OF AROUND £250,000 OF PENSION
FUNDING PER CLIENT WILL OCCUR ASSUMING CURRENT TRENDS CONTINUE

7. A DECADE OF RESTRUCTURING
COMMON JUSTIFICATIONS FOR PENSION PLAN RESTRUCTURES
• Reduce charges
• Poor investment performance (default fund)
• Poor administration
• Lack of technology
• Legislation changes
• Providers withdrawing from the market

8. SCHEME DESIGN ANALYSIS
TYPICAL “90’s” SCHEME TYPICAL “00’s” SCHEME
• Initial charges 5% to 40% • Single priced
• 5% bid/offer spread • No initial charges
• Loyalty units • No bid offer spread
• Default fund - With Profits • Default fund – Lifestyle Tracker
• 10 – 20 unit linked funds • Over 100 fund links
• AMC’s – 1% to 1.5% p.a. • AMC’s – 0.35% to 1.5% p.a.
• Early encashment penalties • Deferred Member Penalties
• Effective RIY 1.4% to 3% • Effective RIY 0.35% to 1.5%
EARLY MOST PROFITABLE PERIOD 0.35% RIY
LEAVER 1.00% RIY
PERIOD 1.40% RIY
3.00% RIY
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

9. THE SAVINGS X FACTOR
• But what are the key factors that influence
long-term savings success MOST?
How much is paid in i.e. Premium
The length of investment term i.e. Term
Asset allocation i.e. Modern Portfolio Theory
Contract charges i.e. AMC
THE REAL FOCUS HAS TO BE ON GETTING
SUFFICIENT PREMIUMS INVESTED ASAP

10. CONFIDENCE CRISIS?
MOST COMMON REASONS GIVEN BY EMPLOYEES FOR NOT JOINING A
PENSION SCHEME
• No spare income
• My home is my pension
• No access
• Benefit too far off
• Not worth doing
• Too complicated
• Don’t trust greedy pension/investment firms

11. KEY CONSUMER POINTS
• Ideal pension at retirement 50% of income
• Limited risk preferred
• Target investment returns agreed at outset
• Protection if something goes wrong
• Fees should not apply if investments fail
• Access to savings in an emergency
• Investment freedom

12. TACKLING THE BIG ISSUES
• Pensions on their own will in most cases fail to
deliver the ideal income based on DC averages
currently operating
• Employers cannot afford more
• Employees cannot afford more
• Society cannot afford more
• Only pensions people think pensions are great
A revolutionary, innovative approach is required

13. 3PPS CORE FOCUS
• Extra funding support critical
• Consumer focused to win back trust
• Has to be more than just a pension involved
• Practical advice and education programme
• Empower small investors in DC schemes
• Long-term view will help to reduce risk
• Practical lifestyle solutions are essential

14. 3PPS POTENTIAL BENEFITS
• Improves financial outcome for savers
• Reduce savings gap
• Tackles consumer negativity
• Provides extra flexibility
• Helps with Employer budgets
• Shifts liability to private sector
• Improves workforce positivity
• Provides opportunity for financial education

15. 3PPS BASIC STRATEGY RISK

16. FOR MORE INFORMATION
EMPLOYEE BENEFIT CONSULTANTS / WORKPLACE DC SCHEMES / TRUSTEES
Please contact Darren Say, Managing Director 07966 069 829
INVESTMENT GROUPS / NETWORKS / IFAS’S / ACCOUNTANTS
Please contact Pierre Coussey, Pension & Investment Strategist 07907 917 133
COMPLIANCE / OPERATIONAL SUPPORT / TECHNICAL
Please contact Ian Bullock, Operations Director 07896 252 061
South East Regional Office T: 01279 899 002 E: info@rgpconsulting.co.uk

17. IMPORTANT NOTICE
This document does not constitute personal advice. Should you have any doubt as to the suitability of an investment for your circumstances
you should contact one of our advisors.
All information and particulars contained in this presentation are for indicative purposes only. They are provided in good faith and are not
intended to form part of any contract at this stage. Calculations and assumptions are provided to the best knowledge of RGP Consulting (UK)
Limited but cannot be guaranteed and may be subject to change. No liability will be accepted for any inaccuracies, changes or damages arising
out of or in connection with the use of information in this presentation.
All information regarding potential returns are examples only and are in no way guaranteed. The value of investments can fall as well as rise
and past performance is no guarantee of future performance. No advice is given as to the suitability of purchasing a 3PPS investment solution
and we strongly recommend the use of an independent authorised professional advisor who can advise you on finance, pensions and
investments. No tax advice is given and it is recommended that investors consult a tax specialist regarding their personal circumstances.
Any tax reliefs referred to are those currently applying, but levels and the basis of, as well as reliefs from, taxation are subject to change. Their
value depends on the individual circumstances of the investor. Before transferring a pension you should ascertain whether any penalties will
apply and carefully consider the overall impact of any investment you make.
The materials and information contained herein do not constitute an offer or a solicitation of an offer for the purchase or sale of any securities
in RGP Consulting (UK) Limited or any of its affiliates. Although this information was believed to be accurate as of the date prepared by RGP
Consulting (UK) Limited or its affiliates, RGP Consulting (UK) Limited and its affiliates disclaim any duty or obligation to update such
information. This information is not intended to make any investment representations about RGP Consulting (UK) Limited or its affiliates and
should not be viewed as such.
No representation or warranty is made by RGP Consulting (UK) Limited about the accuracy, reliability or suitability of the information, material,
systems, services or products contained or discussed herein.
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RGP Consulting (UK) Ltd is an Appointed Representative of Eden Associates, which is authorised and regulated by the Financial Services
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