This document summarizes 6 pension issues that should be concerning: 1) Inflation and its impact on current and future pensioners. 2) The case for retail collective defined contribution pensions. 3) Creating a value for money measure the public can understand. 4) Where additional voluntary contributions still make sense in the Local Government Pension Scheme. 5) The 655,000 economically inactive older workers. 6) Whether Russia has undermined environmental, social, and governance investing.

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