What is to be done about workplace GPPs in a master trust world


Rachel Reeves spoke to colleagues at the Times CEO conference about the importance of DC consolidation. I was not there but it prompted these thoughts.

A lot of conscientious employers, especially in the early years of auto-enrolment took advice and purchased for their staff a workplace GPP with a leading insurer such as L&G, Aegon, Scottish Widows, Standard Life, Aviva and Royal London. Before 2021, when it withdrew from the market, this list could have included Prudential.

With the exception of Royal London, all of the above acquired or built a master trust. L&G’s master trust has now more than £20bn in assets, Standard Life announced this week its assets exceeded £10bn but what about the GPPs?

While it would be wrong to call these workplace GPPs “legacy” or – as insurers now call them “heritage” schemes, they are not being put forward for new schemes (there are no new schemes) nor are they being used to compete in the secondary market (where an employer has become fed up with the existing arrangement). They are not being used for consolidation, because they require member consent and most members are inaccessible (e.g. they’ve left employment). In short, they are white elephants – a bit of an embarrassment.

As soon as I can find a way to exchange my pot for a pension, I will do

I am in one myself and can testify to the underwhelming experience of a clunky web-portal, no app, little feedback, an IGC I never hear from and no share voting system, despite being promised one for five years. I am now a deferred member but I get no offers to continue my scheme, despite running a company that could have used the arrangement (except it didn’t qualify under rules introduced after I helped set up the original arrangement). In short, despite having a pot now getting on for three quarter of a million pounds, I get very little service from my L&G workplace pension. That is not to say that I don’t get value for my money, I know what I pay and I know what I get and, in the end, it is what I get that matters.

I have been lucky with my pension investments, avoiding the default of my GPP (which has underperformed and electing for a high-equity, low carbon approach to investment. But my decisions have been taken without guidance or advice, neither of which are available to me as part of my deal with L&G. I do not see myself as a typical retirement investor, I am trying to make my own way home – aware that I could shoot my finances in the foot in doing so. But I am forty years into saving and I will finish!

As soon as I can find a way to exchange my pot for a pension, I will do – and not with L&G unless they offer me an alternative to the pathways that they’re offering me today. I don’t want to buy an annuity, drawdown, cash-out or leave my pension to my family. I want to live for a long time with the guarantee that my invested pension will last as long as I do. And when I say “invested”, I mean invested. I don’t want, 30 years from my projected date of death to be paid an income based on the prevailing bond yields, I want a pension that is invested in long-term assets with shared outcomes if things go well and guarantees if they don’t! Which is what I get from my DB pension.

Before I get comments about me being entitled – please remember I’m four decades in this game and I’ve always put spending on my retirement first, which is why I am pension heavy!

Now I am thinking I am not alone. Not only am I part of workplace pension that now looks over 400 current employees but as many again ex-employees (First Actuarial scheme), but I talk with people who are in the same boat as me at much larger schemes. One of my colleagues is a member of Standard Life’s GPP set up for BT (back in 2012) it has a default fund offered to members at 0.1% pa AMC. It was seen as a triumph, but it’s now a bit of an embarrassment.

From BT to First Actuarial, careful employers tried to do the right thing back in the early year of auto-enrolment and buy for their staff the best pension on the market and back in the day, the GPP was the thing, the Master Trust the skanky thing you joined if all you could be bothered about was compliance. This is of course doing a great disservice to large employers who started participating in Nest, People’s and NOW but it should be remembered that in the formative years of the workplace pension market, Smart, Cushon, Life sight, Mercer and Aon master trusts were not even open and the insured master trusts were untried and inaccessible.

There is now a clear opportunity to move the savers in these GPPs into master trusts – where the rules of the master trusts allow and I was very pleased to hear that Rachel Reeves was telling those at the Times CEO conference yesterday that she sees “DC consolidation” as a priority. She could do worse, when a Labour Government sets up its pensions review to hone in on the heritage of workplace GPPs which languish as second-class arrangements.


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Henry straddles the world of traditional finance and FinTech and is an active entrepreneur who helps people make good pension decisions. He founded AgeWage and the Pension PlayPen to map the pensions genome and ensure everyone gets data driven information on value for money

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