1、INDEPENDEN T P U B L I C AT I O N BYRACONTEUR.NETwhom the state pension age remains highly relevant.The average retirement age for men is currently 65.2,according to the Pensions Policy Institute,whereas the ave rage retirement age for women was 64.3 in 2020,having been 60.6 in 1995.The higher state

2、 pension age could oblige many people currently in their 40s or 50s to work for longer,predicts Anna Murdock,head of wealth planning at JM Finn.“They may feel they have to continue working to maintain their standard of living until the state pension kicks in.”The national minimum pension age(NMPA)wi

3、ll also increase in 2028,from 55 to 57.This is the point at which you can begin accessing your private retirement savings,so it affects those hoping to retire early or start reducing their work commitments.But very few people use the NMPA as a retirement target,so this increase is likely to have con

4、siderably less impact than the change in the state pension age.While the pensions backdrop continues to change,one thing remains the same:lanning for retirement was a relatively straightforward affair when todays pensioners were still in the workplace.But the rules have changed since then and furthe

5、r changes are to be expected.If you dont keep abreast of whats going on,you risk losing out.In the past,retirement would usually start at state pension age and probably last for a matter of years,rather than decades.It would be funded largely by employers final salary schemes and the state pension.T

6、his situation has altered dramatically in recent years.What does retirement mean now and how can savers best prepare for it?Rising life expectancy means todays workers need to generate sufficient pension savings for a retirement lasting two to three decades or more.At the same time,responsibility fo

7、r saving for retirement has shifted emphatically towards the individual.This process accelerated with the socalled pension freedoms legislation of 2015,which brought more flexibility and choice but also greater complexity.The most significant change in retirement provision in recent years has been t

8、he decline of final salary or defined benefit(DB)schemes,according to Fiona Tait,technical director at Intelligent Pensions.DB schemes provided guaranteed payouts linked to salary.But most pension savers today are in defined contribution(DC)schemes,where the outcome hinges on the amount paid in,that

9、 investments performance and the providers charges.Tait reports that“about threequarters of retirement income comes from private sector DB schemes,whereas nearly twothirds of ongoing contributions are being made to DC schemes”.This means that,while many current retirees are entitled to at least some

10、 proportion of a guaranteed income stream,it will be a different story for the pensioners of tomorrow.Two changes taking place in 2028 will further raise the stakes.First,the state pension age for men and women 66 at present will increase to 67.This wont affect those with enough pension savings to b

11、e able to choose their retirement date,but it will have a much bigger impact on people with more modest pension pots,for too few people are adequately prepared for retirement.A third of generation Xers people currently aged 42 and 57 are at a high risk of retiring with“minimal”incomes,according to t

12、he International Longevity Centre UK.A research report by the Social Market Foundation underlined the problem in February when it revealed that more than twothirds of 50 to 64yearolds in the UK dont know how much money they will need to save for their retirement.Those in their 40s and 50s are also m

13、embers of the socalled sandwich generation,often helping elderly parents with later life care while also supporting adult children with rising living costs.“For many people,retirement is mainly going to be dictated by affordability and savings rates are largely inadequate to support a comfortable re

14、tirement,”Tait observes.“The ability to retire earlier than the state pension age will often be unsupportable,so they will have to wait until age 67 or later.”People saving for retirement now are more likely than previous generations to have multiple workplace pensions,private pensions and nonpensio

15、n funds such as individual savings accounts(ISAs).While their retirement income will depend on variables such as investment returns,they will have more flexibility and choice in how and when they retire.But that flexibility demands a proactive approach.The level of savings needed for a comfortable r

16、etirement clearly varies between individuals.But the Pensions and Lifetime Savings Association(PLSA)has proposed a set of national retirement income targets to give people a better idea of how much they need to be saving.For instance,someone living in a single household outside London would require

17、apension pot of 440,000 for a“moderate”income in retirement and 966,000 to be“comfortable”.The PLSA believes that an ongoing savings rate of 12%is needed to provide a“modest”retirement income.Although the pensions landscape has become more complex,there are some fairly simple steps that savers can t

18、ake to boost their retirement savings.The first is to get into the habit of saving from a young age.If you put even modest amounts regularly into a pension and/or ISA,you can let compounding work its magic.This is the snowball effect that occurs when the returns from your investments are reinvested

19、to generate their own growth.“The best tip I can give is to start saving as early as possible and base your lifestyle around what is left,rather than trying to reduce what you are already spending,”Tait suggests.Second,use your workplace pension.If youre in your employers scheme,its likely to match

20、your contribution or at least pay in a percentage of that sum.Youll also be getting tax relief on your contributions at your marginal income tax rate.“To illustrate the point,should you be a higherrate taxpayer and wish to make a 10,000 contribution to your pension plan,it could cost you as little a

21、s 6,000 net and you will benefit from 4,000 tax relief,”Murdock explains.And do ensure that you use all of the tax allowances and exemptions available to you,advises Tom Munro,owner of Tom Munro Financial Solutions.“For example,maximising ISA contributions each year will accumulate free of tax over

22、time,providing a taxfree income stream later.”Given the longterm nature of retirement,peoples approaches to it naturally tend to change slowly.As Tait notes:“Most people in their 40s and 50s base their expectations of retirement,if they think about it at all,on their parents experiences of it.They d

23、o this without realising how much longer they are likely to live or appreciating the impact of the shift from DB to DC.”Those who can accumulate substantial private savings will be able to choose when and how they wish to retire but they are likely to be in the minority.Distributed inLead publisherJ

24、amie OglesbyDeputy editorFrancesca CassidyHead of productionJustyna OConnellDesign/production assistantLouis NassManaging editorSarah VizardReports editorIan DeeringPublished in association withAlthough this publication is funded through advertising and sponsorship,all editorial is without bias and

25、sponsored features are clearly labelled.For an upcoming schedule,partnership inquiries or feedback,please call+44(0)20 8616 7400 or e-mail .Raconteur is a leading publisher of special-interest content and research.Its pub-lications and articles cover a wide range of topics,including business,finance

26、,sustainability,healthcare,lifestyle and technology.Raconteur special reports are published exclu-sively in The Times and The Sunday Times as well as online at .The information contained in this publication has been obtained from sources the Proprietors believe to be correct.However,no legal liabili

27、ty can be accepted for any errors.No part of this publication may be reproduced with-out the prior consent of the Publisher.Raconteur Mediaraconteur/raconteur_londonPENSIONS&RETIREMENTS U P E R F U N D SS AV I N G S S T R AT E GYT E C H N O L O GYWhat does Claras regulatory approval mean for the fut

28、ure offinal salary schemes?Optimal approaches to pensionplanning,all the way from 15 to 55 years of ageThe year ahead for pensions tech and what to expect fromthe pensions dashboard020608/pensions-retirement-Jeff Salway PSimon Brooke A freelance journalist with25years experience ofcovering business

29、and finance;wealth management;sustainability;the luxury sector;and marketing and communications for a wide range of outlets.Ben Edwards A freelance journalist specialising in finance,business,law and technology,with more than a decade of editorial and commercial writing experience.Nichi Hodgson An a

30、uthor,journalist and broadcaster with more than adecade of experience in international media.Jeff Salway A freelance journalist and former personal finance editor at The Scotsman and Scotland on Sunday.He has contributed to the New Statesman,Money Observer,the Financial Times and Money Management.Ch

31、ris Stokel-Walker A technology and culture journalist and author,with bylines in The New York Times,The Guardian and Wired.Alex Wright A business and financial journalist with more than 20years experience,having worked on international,national,regional and local newspapers,and on trade and consumer

32、 magazines.ContributorsPensions Management Institute,202118%4%of UK adults aged 40 to 49 know that the minimum age for accessing private pensions will be raised in a few yearsof UK adults aged 40 to 49 can correctly identify the current minimum age(55)Aegon,2020RETIREMENT PLANS AMONG UK ADULTSWhich

33、of the following best describes your retirement planning strategy?Retirement is mainly goingto be dictated byaffordability andsavings rates are largelyinadequateINDEPENDEN T P U B L I C AT I O N BY20/03/2022#0791RACONTEUR.NETP L A N N I N GSub-editorsNeil ColeGerrard CowanHow to play by the new reti

34、rement rulesThe savings landscape has changed dramatically in recent years.Following the precedents set by previous generations is unlikely to work out well for people in their 40s and 50sDesignKellie JerrardCelina LuceyColm McDermottSean Wyatt-LivesleyDesign directorTim WhitlockIllustrationSara Gel

35、fgren Samuele Motta80%100%60%40%20%I have a plan,but it isnt written downI have a written planI dont havea planI dont know2015201620172018201920200%DISCLAIMER:content in this publication should not be used as financial advice.Please ensure that you always seek the help of a qualified financial profe

36、ssionalP E N S I O N S&R E T I R E M E N T02Superfundamentals:howClaras clearance could affect the sectoruperfunds looked set to shake up the UK pensions sector when they arrived on the scene four years ago,but their impact has been less than seismic so far.Of the two main providers that have emerge

37、d to date,only one,Clara Pensions,has secured approval from the Pensions Regulator.The other,the Pension SuperFund,is still awaiting clearance.What are the main differences between the two?What are their chances of commercial success?What risks,if any,do they pose for members and trustees?And will 2

38、022 be the year when superfunds truly make their presence felt?Also known as a commercial consolidator,a superfund is designed to take on several final salary corporate pension schemes and use its economies of scale to run them more costeffectively than the firms that established them could on their

39、 own.Clara and the Pension SuperFund are approaching this task in different ways.Claras model is known as a bridge to buyout.Its designed to run a scheme for a relatively short period probably between three and eight years before this is bought out by an insurance company.Until that time,the schemes

40、 assets and liabilities will be kept in an allocated section of the Clara master trust scheme,where they will be treated separately from any other funds.Claras investors will put up the necessary capital against a given scheme to ensure that it reaches the buyout stage,satisfying the regulators requ

41、irement that the fund be protected against a onein100year adverse event.This money will then be returned to the investors once the buyout is completed.By contrast,the Pension SuperFund is proposing to use the longterm runoff method.This is designed to administer a schemes benefits in perpetuity and

42、run off its liabilities over several years.Each scheme it takes over will also be pooled rather than sectionalised,with any surplus being shared among the members.Its investors will also need to put up capital to protect each scheme,but this money will be dripfed back to them once its no longer requ

43、ired.Investors in Clara,by contrast,will get their money back in one go.Having been given the regulatory green light in November 2021,Clara is expected to take over numerous schemes by the end of this year.Pension Protection Fund buyouts are likely to be among the first in its sights.The Pensions Re

44、gulator has established three socalled gateway principles that any proposed transfer into a superfund must satisfy,based on the watchdogs position that superfunds cannot match the level of security provided by insurance companies.The first is that the scheme under consideration cant afford a normal

45、insurerbacked buyout.The second is that there is no realistic prospect of such a buyout in the foreseeable future.And the third is that thetransfer would make the scheme members more likely to receive the full benefits due to them on retirement than they otherwise would be.With these restrictions in

46、 mind,uptake is widely predicted to be slow and steady in 2022 before accelerating next year.“In the short term,the focus will be on ensuring that the first of these new and complex transactions happen smoothly,rather than to push for volume,”predicts Harry Harper,head of risk transfer at XPS Pensio

47、ns Group.Once these have been completed,the key for Clara will then be to grow quickly,“with efficient processes,so that schemes and their providers can benefit from economies of scale,delivering members benefit promises into the future”.Tom Hargreaves,principal and senior consultant at Barnett Wadd

48、ingham,believes that any superfund would“need a minimum of 5bn in assets taken on from other pension schemes to achieve scale.This may take time,even with a strong first The UKs first commercial consolidator has at last secured regulatory approval.Howwillthe superfund market work and what effect mig

49、ht it have on the provision of defined benefit pensions?year.But there is sufficient demand from pension schemes to enable superfunds to reach this point.Insured solutions are likely to remain the gold standard,but that will be out of reach for some schemes.”One of the biggest concerns for scheme me

50、mbers about a potential transfer to a superfund is that theyll be moved out of agood corporate plan thats focused on giving them a healthy return to a larger fund whose main priority is to make profits for its investors.The fear is that they might not receive the full pension they were expecting as

51、a result.But the bottom line is that the regulator will allow a scheme to be transferred only if the employer in question and its pension trustees can show that this transaction will improve members chances of receiving all the benefits due to them as set out in its third gateway principle.When deci

52、ding the best course of action,they must therefore weigh up the companys ongoing ability to support the scheme against the likelihood that the superfund will meet its objectives.Moreover,trustees need a valid reason for resorting to a superfund rather than an insurer.They must exercise due diligence

53、 and take appropriate advice when choosing one.They should also communicate clearly to members how their pensions will be provided under the superfund model if that is the chosen option.“One of the biggest challenges is assessing employer covenants over the longer term.For many companies,it is hard

54、to predict how they will fare over anything but a relatively short period,”notes Claire van Rees,a partner specialising in pensions at law firm Sackers.Trustees and their advisers might genuinely believe that the third gateway principle is met,“based on their assessment of the sponsoring employers s

55、trength at the time”,she adds.“But their decision could come under heavy scrutiny if things dont play out as expected and the chosen superfund fails or exits the market,say,while a weak emp loyer does better than expected.”While its true that the focus of a superfund will be on remaining profitable

56、for its investors,first and foremost it is a pension scheme thats managed by trustees who need to deliver for members.The regulator will also be keeping a close eye on superfunds activities to ensure that members arent getting ripped off.Final salary schemes are“increasingly finding that they need t

57、ime as much as they need money.In some cases,the contributions are no longer their focus.Corporate longevity is the real issue,”observes Jane Kola,partner at Arc Pensions Law.“For these schemes,superfunds are likely to be attractive as an option if the sponsoring company is struggling.It would be a

58、shame if those schemes did not explore this option.”PwC,2020600170bn5,4005bndefined benefit pension schemes could satisfy the regulators three gateway principles and be sufficiently funded to transfer to asuperfund in the next decadeThe combined value of those 600 schemesThe total number of defined

59、benefit pension schemes remaining in the UKThe amount of pensions liabilities that Clara expects to assume over the next five yearsAlex Wrighthe pensions industry has long grappled with a cost problem:the smaller a pension scheme is,the higher the per member costs of running the scheme.“Theres a who

60、le range of costs across a pension scheme,although investment management charges were probably the lightbulb moment for us,”says Mark McClintock,a partner in Deloittes pensions consulting busi-ness.“Why should a pension scheme with 10m of assets pay a higher annual management charge than a pension s

61、cheme with 100m of assets with the same fund manager in the same fund?”That uneven backdrop is driving consolidation across the pensions industry in an effort to level the play-ing field for small and medium-sized pension schemes.The aim is to reduce their costs and enable them to benefit from the s

62、ame economies of scale that larger pension schemes enjoy.One potential snag is that consoli-dation has traditionally meant employ-ers and trustees have been forced to relinquish control of their schemes in order to merge their assets with a consolidated fund.“To access a vehicle that allows you to c

63、onsolidate,you typically have to give up somethingand that,if youre an employer,is essentially loss of control,”says McClintock.“That matters because employers will have a trustee board that oversees their pension fund and they will know them and understand how they act;there are no surprises.”Under

64、 that relationship,employers maintain influence over the schemes investment and funding strategy-and therefore have more control over how fast the scheme progresses to a fully-funded status.“If you go into a consolidation vehi-cle,you dont control who the trustee is and you lose the ability to have

65、your own autonomous plan,”says McClintock.That structural impediment,which has traditionally deterred smaller schemes from consolidating,was the catalyst for Deloitte creating the Deloitte Pensions Master Plan(DPMP).This is a pension plan that allows defined benefit(DB)schemes to pool their assets w

66、ithout ceding control.“The key design feature we came up with was allowing pension funds to lift and drop into our plan with a schemes existing trustee in place,”says McClintock.“That means there is no loss of control,which is a unique proposition in the market.We believe no other DB master trust ha

67、s this fea-ture-you get the trustee that attaches to that consolidation vehicle.Thats a big barrier for a lot of small and mid-size pension schemes.”DPMP solves this by having each scheme that drops into the fund remaining as a separate entity with its own trustee board.That means trus-tees maintain

68、 their existing powers,including investment discretion.There is also a central professional trustee sitting at the core of the Master Plan who is responsible for oversight of the fund as a whole and can be called on if needed,for instance if a schemes trustee is facing a particularly difficult decis

69、ion and they want a second opin-ion from an experienced practitioner,says McClintock.Aside from maintaining control,the other main benefit of this struc-ture is that it can drive down costs for small and medium-sized pension schemes by pooling all of the schemes assets without breaking the segrega-t

70、ion of each individual scheme sec-tion.Deloitte kick-started the plan by pooling the assets of its own defined benefit scheme,giving the Master Plan sufficient scale to immediately help member schemes reduce their costs.Initially,typical reductions in invest-ment costs were around 30%but that has si

71、nce risen to more than 50%,McClintock says.“As the Master Plan gets bigger,the ability to drive down those costs con-tinues to grow,so it becomes a club where the people who are already in it benefit as others join,”he says.“And,of course,the more you reduce the cost,the more money stays in the fund

72、 and so that drives better funding over time and better outcomes for members.”Robert Hughes,chairman of Hughes Electrical and one of the DPMPs members,says the cost savings of a DB master trust and the ability to retain its existing trustee board and manage its own investment strategy were the chief

73、 motivations for joining the plan.Other companies have also signed up to diversify their workplace pension schemes.“Working with Deloitte,we devel-oped and launched the BT Hybrid Scheme,a blended defined benefit and defined contribution scheme,based on the DPMP.Were delighted with the scheme:for mem

74、bers,it provides greater income certainty and is easy to use;and for BT its cost effective and reduces risk,”says Kerry Shiels,pen-sions director at BT Group.The DPMP will typically benefit all small and mid-sized DB schemes.That could be anything up to 500m of assets,especially if those assets are

75、split across several investment man-agers where the scheme would quickly lose the benefit of scale.The size of the potential market in the UK for DB schemes that fall under this umbrella is around 3,000.“Were finding that even getting to several hundred million of assets,the cost savings are really

76、quite significant,particularly on the investment side,”says McClintock.The drive for more innovation in the pensions industry comes as the Department for Work and Pensions(DWP)seeks to encourage the consol-idation of DB pension schemes where it can benefit the schemes by reducing costs,enabling more

77、 effective invest-ment strategies and improving gov-ernance.The introduction of the DB master trust self-certification regime,for instance,enables employers that are considering consolidation to com-pare schemes through self-certificates hosted on the Pensions and Lifetime Savings Association websit

78、e.“The pensions industry has had rel-atively little innovation in the past,so when something new comes along that seems to move the goalposts quite sub-stantially people are naturally sceptical.But one of the benefits of the self-cer-tificates is to have more information available and make this feel

79、 a bit more real for employers,”McClintock says.DWPs support for the creation of self-certificates,and the information they provide to employers and trus-tees,will be critical in helping build trust when companies are weighing up new ways of managing their pension schemes and maximising the benefits

80、 of consolidation.For more information about the Deloitte Pensions Master Plan please visit dpmp.co.ukHaving your pensions cake and eating it Innovation in the defined benefit pensions market is enabling employers to reduce the costs of their pension schemes through consolidationbut without losing c

81、ontrolCommercial featureTTypical reduction in investment costs for schemes joining the Deloitte Pensions Master PlanThe potential number of defined benefit pension schemes in the UK that could benefit from Deloitte Pensions Master Plan savings50%3,000Deloitte,2021Deloitte,2021S U P E R F U N D SComm

82、ercial featureS Insured solutions are likely to remain the goldstandard,but that will be out of reach for some schemes Superfunds are likely to be attractive if the sponsoring company is struggling R A C O N T E U R.N E T0374WHEN WILL YOU RETIRE?The state pension age is rising around the world as pe

83、ople live longer and birth rates decline.This means that the old model of starting work(or university)at 18 and retiring between the ages of 60 and 65 is becoming increasingly uncommon,as is that of women getting to retire before men.But what does this mean for how long you might need to work before

84、 you can down tools for good and isit affecting the incomes of those whove already retired?Year-on-year rise in the number of 65-year-olds in work55kNumber of extra hours worked by 65-year-olds each week on average1.8mEMPLOYMENT AMONG PEOPLE AGED 65 ROSE SIGNIFICANTLY IN THE UK LASTYEARThe governmen

85、t raised the state pension age from 65 to 66 between late 2018 and late 2020.Its estimated that this move had the following direct effects in 2021THE PERCENTAGE OF OLDER PEOPLE LIVING IN THE UK HAS BEEN INCREASING SINCE THE MIDDLE OF THE 20TH CENTURYPercentage of the population in Great Britain aged

86、 65 and over%aged 65 and overMen2020%aged 75 and over%aged 85 and overTHE AVERAGE EFFECTIVE AGE OF RETIREMENT IS RISING ONCE AGAIN IN MANY COUNTRIESAverage age a person withdraws from the labour force,from selected OECD countriesTHE AVERAGE GLOBAL BIRTH RATE HAS DECLINED BY MORE THAN HALF SINCE 1960

87、Number of children who would be born to a woman if she were to live to end of her childbearing years and bear children in accordance with her countrys age-specific fertility rates of that yearWomenFutureSEVERAL COUNTRIES ARE INCREASING THEIR PENSIONABLE AGESState retirement age for men entering the

88、labour market at age 22 with a full careerThe fertility rate required to maintain the current global population25%20%15%10%5%0%19502050Female life expectancy at age 65 years in Great Britain between 2018 and 202021yearsOffice for National Statistics,2021Office for National Statistics,2021Male life e

89、xpectancy at age 65 years in Great Britain between 2018 and 202018.5yearsWorld Bank,2020Office for National Statistics,2019OECD,20202000(or earliest year thereafter)2018THE RELATIVE INCOME OFOLDER PEOPLE HAS BEEN RISINGAverage disposable income of people aged over 65 as a percentage of the average d

90、isposable income of the nations total population50%100%Italy86%100%OECD,20210%The percentage-point rise in the employment rate of men aged 657.4The percentage-point rise in the employment rate of women aged 658.5Institute for Fiscal Studies,2022LIFE EXPECTANCY WORLDWIDE HAS RISEN RAPIDLY SINCE 1960T

91、he number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its lifeAGE5560657075World Bank,202019602019706019701994201865CHILDRENCOLOMBIANIGERIAUKCHINAWORLDWIDEMALAYSIA19898642.119602019Australia69%75%Denmark71%81%UK73

92、%81%Iceland80%95%Portugal80%99%Israel82%103%OECD average82%88%DENMARKFINLANDGERMANYGREECESOUTHKOREAESTONIAUKBELGIUMCZECH REPUBLICCOSTA RICAINDONESIAITALYPORTUGALAUSTRALIALITHUANIATURKEYNETHERLANDSUSFRANCELATVIASLOVAKIARUSSIAOECD,20212706055657550AGE72.751990201020301970198965.463.7AGEP E N S I O N S

93、&R E T I R E M E N T04QHow would you describe the industrys approach to AI?SBIt has been moving slowly in this area,but I have seen pockets of innovation.There are three big stumbling blocks for many players when it comes to AI:what is the business case,how can I actually do it and how can I ensure

94、that its accurate?Some people believe that AI is here to replace the human component,but I dont think thats right.AI is a way to help you have the right conversations with the right people.The most common use cases for AI are focused on individuals saving for retirement.Weve seen significant growth

95、in roboadvisers and new tools to help analyse and understand someones behaviour,enabling better recommendations.AI is also being used by human advisers to aid the planning process by creating profiles for clients and helping to match individual savers within set parameters.That said,AI has yet to fe

96、ed through to a macro decisionmaking level in the industry.The important thing is that businesses first identify what they want AI to solve.They need a laser focus on a specific problem.Solutions will then need to be tested,reviewed and refined.The real benefit will come when the industry stitches t

97、ogether these tested pieces of technology.This will lead to the much broader adoption of AI.QWhat are the main factors hin-dering the wholesale adoption of AI-led services and the development of more widely applicable AI tools?SBPrivacy and security concerns can be barriers to uptake,but finding a c

98、ompelling use case with provable benefits is the main hurdle for all new technological adoption.When you have a shiny new hammer,all problems look like nails.Its only with time,experience and domain knowledge that you find the real nails.We have also heard about the need for quality data,but in real

99、ity the first issue is simply making sense of the material thats available.Abundant data sets exist,but they are disparate and proprietary.Often it is not the availability of data that is the problem but identifying a use.AI can homogenise and clean data,but this requires oversight,training and,I wo

100、uld argue,a level of collaboration and openness in the industry.Quality of data remains a challenge.In the first instance,a significant investment is required in manually reviewing and validating initial data sets.But the collection of robust datais gathering pace.As more of this material becomes av

101、ailable,more questions can be answered.QWhat will be the most signifi-cant AI use case over the next couple of years?SBThe strength of machine learning and other AI technologies lies in forecasting.While history doesnt repeat itself,it often rhymes.For the institutional pension fund market,there are

102、 huge opportunities.We arent too far from a world in which a funds assets and liabilities can be quickly remodelled and reprojected with the aid of AI.Strategy recommendations will be presented totrustees,while funds can focus on ensuring they are asking the right questions of the right people.Advis

103、ers will be able to add specific opinions at the right stage of the process.This world can become incredibly efficient,ultimately resulting in a better retirement for everyone.While the most likely use of AI is probably not as straightforward as what Ive outlined here,it is never easy to predict the

104、 next stage of a technologys evolution.In our industry,the same decisions will still need to be made.AI will simply become the key tool in that process.It is there to inform an approach,not to dictate it.Modelling will be more accurate and allow for a higher level of decisionmaking confidence.The te

105、ch wont be making the decision and it wont replace the workforce but it will require a different set of skills.AI is there to inform an approach,not to dictate itStuart Breyer CEO,MallowstreetI N S I G H TSmall DC schemes face big changes Westminsters decision to subject many defined contribution fu

106、nds to enhanced value-for-member assessments could have an industry-wide impactnder provisions brought in by the government and the Pensions Regulator in October 2021,smaller occupational defined contribution(DC)schemes must undergo enhanced value formembers(VFM)assessments.While the new regime aims

107、 to secure the best possible deal for savers,it could have implications for adviser costs and fund administration atthe very least.The new VFM assessment applies to any DC scheme with total assets below 100m that has been operating for at least three years.Such a scheme must compare its costs,charge

108、s and returns against those of three other schemes.It must also conduct a selfassessment of its administration and governance in line with seven key metrics.Each affected scheme must then report the outcome of the assessment in its annual chairs statement and submit the findings to the Pensions Regu

109、lator in a scheme return.If the trustees cannot demonstrate that VFM is being offered,theyll be expected to wind up the scheme and transfer its members to an alternative provider.The move has been prompted partly by the success of autoenrolment,with more people than ever in the UK saving into DC sch

110、emes.David Fairs,executive director for regulatory policy,analysis and advice at the Pensions Regulator,explains that the watchdog does not want anyone to“be left languishing in poorly governed schemes that dont offer the same value as larger schemes”.Its thought that Westminster thinks that larger

111、schemes have the resour ces and economies of scale to ensure good governance.Suzanne Burrell,pensions partner at law firm Shoosmiths,says:“Smaller schemes are seen by the government as having more limited investment opportunities,whereas a large master trust with billions in assets may be able to ta

112、ke advantage of significant infrastructure investment opportunities.”The authorisation regime that was enacted for master trusts in 2017 set a high bar,with requirements including proof of financial stability and a test to check the competence of those running schemes.With every master trust already

113、 having to show that it provides VFM,moving on to smaller DC schemes can be seen as the natural next step for the government.“Ive seen a number of clients move their DC schemes into master trusts in recent years.This has been easier to accomplish since the introduction of the authorised master trust

114、 regime,”Burrell says.“The new VFM assessment is likely to result in a further wave of consolidation.”Some employers,she adds,may have made a deliberate choice to keep their DC scheme in house so that they dont have to unravel some of the benefits provided.These might include a withprofits policy,wh

115、ich is aimed at smoothing out the peaks and troughs in the value of investments caused by market volatility.Such benefits might also be provided as part of a hybrid arrangement in a scheme that has elements of both a DC pension and a defined benefit pension.Although hybrid schemes are not exempt fro

116、m the VFM assessment,some people believe that the government might consider exemptions in cases where a funds total assets exceed 100m but the DCelement is below that figure.Whatever the benefits to savers and the countrys infrastructure,establishing the new regime could require a significant amount

117、 of management time by administrators and also inflate adviser costs,at least in the short term.As a result,some schemes might seek consolidation opportunities to manage these additional costs and administrative requirements,even if they can tick the VFM boxes.In cases where a scheme fails to satisf

118、y the VFM requirements,there will be even more work to do.But that could provide the affected company with the time and space to rethink its entire pension fund strategy and ensure that whatever replacement it introduces not only meets its needs in terms of rewards but also supports its corporate cu

119、lture.Could a new scheme help the firm to achieve its corporate social responsibility or environmental,social and governance goals,for instance?The new VFM requirements could prove hugely beneficial to master trusts,says Mark Pemberthy,principal and benefits working hard to win investment mandates f

120、rom master trusts to participate in the fastgrowing DC market.”The new VFM assessment regime could accelerate the already impressive growth of master trusts,which added 30bn in assets in 2020 alone,thanks lar gely to contributions from auto enrolled members,according to research by fintech firm Broa

121、dridge.They are predicted to enjoy a growth rate of 24%a year to amass 461bn in assets by 2029,by which time they will account for threequarters of total trustbased assets.Many observers are wondering whether the VFM requirement will be extended to larger schemes.Last summer,the government gathered

122、evidence on the barriers and opportunities for greater consolidation of schemes with between 100m and 5bn of assets under management.It will publish a summary of the evidence received and an indication of its plans in the coming months.Some experts believe that any changes will serve to accelerate t

123、he consolidation of DC pensions a trend that the government has been encouraging.As more smaller schemes decide which master trust to join,the market is likely to become increasingly competitive,according to David Snowdon,DC director at master trust provider SEI.“Companies thinking ofjoining a maste

124、r trust in 202223 should be mindful of potential capacity issues,as many others are seeking to make that move,”he warns.While master trusts should provide value for members,it doesnt mean that they are all the same,Snowdon stresses.“It is important to find the right fit for your scheme members,with

125、providers out there varying between frills and no frills;off the shelf and tailored;and mass market and bespoke,”he says.“And,faced with a consolidating and contracting master trust market,employers should ensure that they choose one thats here to stay.”consulting leader at the Buck consultancy.He b

126、elieves that this is their“biggest opportunity to grow their client and asset base since the introduction of automatic enrolment.The big master trusts are all positioning themselves to be the merger scheme of choice.The next few years will define the shape of the DC market for several years to come.

127、Similarly,asset managers are still Simon Brooke Smaller schemes are seen by the government as having more limited investment opportunitiesR E G U L AT I O NUDEFINED CONTRIBUTION PENSION FUNDS IN THE UKMemberships of occupational DC schemes(including hybrid)by membership size groupThe Pensions Regula

128、tor,202120m15m10m5m0201012 to 99100 to 9991,000 to 4,9995,000+20112012201320142015201620172018201920202021Number of schemesCommercial featureCommercial featureThe rise of master trusts but not all are made equalMaster trusts have experienced rapid growth in recent years and offer many advantages,but

129、 employers and trustees need to think carefully before choosing oneThe amount master trusts will have in assets by 2029461bnaster trusts have enjoyed rapid growth in recent years as an increasing number of employers use them as a way to reduce risk and costs,improve oversight and upgrade the invest-

130、ment options available to their employees.While the workplace defined contribu-tion pension market is expected to grow by about 8.3%annually until 2029,master trusts are expected to grow by 20.8%per annum,according to Smart Pension,which has grown rapidly to become one of the big four auto-enrolment

131、 master trust provid-ers on the basis of its innovation and sus-tainability focus.The value for money(VFM)requirement for occupational pension schemes with assets of 100m or less,which requires them to compare costs,charges and invest-ment returns against three other schemes,is another driver becaus

132、e master trusts can provide economies of scale.Scale also means that master trusts are better placed to make the most of opportunities to invest into infrastructure projects.“Its also about harnessing the latest technology to improve the user experi-ence,”explains Paul Bucksey,managing director of S

133、mart Pension.“This is impor-tant because,for example,with an ageing population there is a need to focus on helping individuals convert their pension savings to income.Increasingly,we know that people plan to carry on working,albeit part time,and so theyll want to manage their pension income alongsid

134、e any income from their work.”It was their blend of financial and techno-logical expertise that enabled Andrew Evans and Will Wynne to launch Smart Pension in 2015.Today,the companys global aspect means that it can scan the sector interna-tionally for best practice.“Whether youre an employer,an advi

135、ser or a member,you can interact with Smart Pension instantly.Someone was complaining recently to me about how it took five days with their old provider to change their address but with us you just go onto the platform and do it yourself,”explains Bucksey.Master trusts strong governance and their us

136、e of trustees to reduce the administrative burden on employers,as well as their ability to upgrade their investment strategy with-out needing the consent of members when necessary,all form part of their appeal.With around 35 master trusts currently availa-ble and competition intensifying,employ-ers

137、looking to switch to a master trust might wonder how to choose the right one.Were seeing companies transfer from their own trust-based pension over to Smart Pension for cost and fiduciary reasons,as well as to simplify their pensions administration and upgrade the support and guidance available to t

138、heir employees.Bucksey says:“We know choosing sustain-able investments that help to reduce the impact of climate change,improve diversity and inclusion,and have a positive impact on the world is at the front of peoples minds.”As a result,Smart Pension is ensuring that members can take advantage of n

139、ew opportunities.More than 70%of its default growth fund is already invested in line with environmental,social and governance(ESG)principles,with plans to increase this to 100%over the coming months.“As well as growth in the sector,well continue to see some consolidation of master trusts over the ne

140、xt few years,”says Bucksey.“And its clear that the winners will be the most technologically enhanced,allowing them to provide employers and employees with value for money and an easily accessible interface,as well as the opportunity to invest responsibly while providing strong governance,thereby red

141、ucing the burden on employers.”For more information please visit smartpension.co.ukM The master trust sector is forecast to become the fastest-growing market segment over the next decadeBroadridge,2021A Q&A with Stuart Breyer,CEO of Mallowstreet,on the pensions sectors use of artificial intelligence

142、 R A C O N T E U R.N E T05Commercial featurehe prospect of endless work-free days may seem unrealis-tic when youre head down in spreadsheets or prepping for another conference call.And its fair to say theres a lot of negativity about pensions in the press,from the hubbub over tax rules to the rising

143、 state pension age.But for many working professionals,being able to retire in your 60s,70sand beyond is an achievable aim.You only have to look at the growth of the finan-cial independence retire early(FIRE)movement-where people live on the tightest budgets and strategically build their assets,with

144、the aim of stopping work as young as possible-to see that it can be done.(Although most people arent planning to quit work in their 40s,so embracing minimalism and extreme frugality isnt necessary!)Achievable doesnt mean easy.Planning for retirement is a science;a pension calculator can spell out ho

145、w much you need to put away each month and the rate of return your investments will have to reach.But it is also an art;no algorithm can tell you which of the plethora of accounts to use,from SIPPs to Lifetime ISAs,workplace schemes or properties.Previous generations had a huge advantage over todays

146、 working age population:their retirement planning was largely done for them through gen-erous final salary pensions and public sector schemes.The days when businesses and the state supported individuals through their grey-haired years are long gone,meaning its now up to each of us to make our own pl

147、ans.Thats a greater burden undoubtedly-being well-versed in pensions and saving hard are essential-but it also means poten-tially greater freedom when it comes to choosing what to do with your assets post-65.For example,final salary and public sector pensions(known as defined-ben-efit schemes in ind

148、ustry jargon)gave retirees a fixed amount of money for life.They were fantastic in terms of assured future income,but inflexible for people who wanted to withdraw a bigger chunk of savings to purchase property,gift to children or travel the world.Those sorts of pension arrange-ments are an endangere

149、d species today.Most younger workers will be paying into so-called defined-contri-bution schemes,where the individual can decide how much to contribute each year,where it should be invested and how much they want to withdraw each year in retirement.None of those decisions have to be made once-con-tr

150、ibutions and withdrawals can be changed from year to year,much more like a bank account.Becoming confident that youre able to make these decisions and be finan-cially stable in the decades to come means rethinking a few things.1Shaking off the notions of what retirement is Pensioners,retirement and

151、the fuzzy concept of saving for later life often bring to mind some stereotypes:cruise ships,bingo halls and drinking sherry.Much as we love the senior citizens in our lives,we find it hard to picture our-selves reaching that age or being part of that culture.The good news is that you will,in all li

152、kelihood,get to that age(no point fight-ing it)but the current generation of working people wont age the same way our elders did.Each generation takes some of their hobbies and habits with them into old age-so retirement in 30 years will be more about craft beer,adventure travel,oat lattes and cross

153、fit.You will want to have enough money to keep on doing the things you love,and that means retirement planning needs to start decades in advance.2Not being put off by the jargon Like many industries,pensions and retirement planning have developed their own vernacular over the past 50 years,which can

154、 bamboozle the unini-tiated.Jargon terms such as crystalli-sation event,money purchase scheme,and lifetime allowance actually describe quite simple concepts that anyone can understand so dont be daunted.3Knowing that investing in pensions is a different kind of beastYou may know a good deal about in

155、vest-ing and already have stocks and shares ISAs,or other assets.Although the golden rules of investing are the same with pensions as with ISAs invest for the long term in things that are easily understandable,while keeping an eye on fees there are some key differences.Investing for a retirement tha

156、t begins 30 years from now requires a different strategy to investing for a property pur-chase in five years time.Over those three decades your tolerance for risk changes,alongside your need for growth-focused versus income-producing investments.Plus the investment charges mount con-siderably with t

157、he sheer size of your pen-sion,which is usually the biggest asset most people have after their home.So be open to options that may be particularly well-suited to your pension plans such as managed portfolios or pas-sive investments,even if you may not use them elsewhere.Of course this is just scratc

158、hing the surface of the complex world of per-sonal pensions.If this article has given you food for thought,or you would like understand more fully how crystallisa-tion events,money purchase scheme or the lifetime allowance could affect your pension planning then join us at Nutmegs free Understanding

159、 the pension lifetime allowance webinar at 5pm on 26 April.You can register at or use the QR code on page 8.As with all investing,your capital is at risk.The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.A pension may not be right for everyon

160、e and tax rules may change in the future.If you are unsure if a pension is right for you,please seek financial advice.Understanding the complex world of personal pensionsBeing retired is like having a lifetime of Saturdays stretching out before you.Having enough money saved to no longer have to work

161、 is an incredible freedom.What would you do with your days if you didnt need to work to pay the bills?Commercial featureT The days when businesses and the state supported individuals through their grey-haired years are long gone,meaning its now up to each of us to make our own plans Be open to optio

162、ns that may be particularly well-suited to your pension plans such as managed portfolios or passive investmentsGreen paper:providers get ready to issue first environmental reportsembers of the UKs largest pension schemes wont have to wait much longer to learn how their investments are affecting the

163、environment.The reporting framework of the international Task Force on ClimateRelated Financial Disclosures(TCFD)came into effect in October 2021,starting the countdown for a host of workplace schemes in the UK to publish their reports.The first are set to come out in the next few months.The new reg

164、ime applies to schemes with more than 5bn of assets under management,as well as master trusts of all sizes.Schemes with more than 1bn of assets under management will have to start complying with the rules from this October.While the regulation is already live for those larger schemes and master trus

165、ts,they have seven months from the end of their scheme year to produce their report.For instance,if a schemes year ended in December,it will have until July to publish.Most schemes run either from January to December or from April to March,notes Stuart OBrien,a partner at Sackers.But its not only re

166、porting that schemes must worry about.They are also several governancerelated activities that need to be completed by the end of their year.This means that the rules have varying effects,depending on when that date lands.“If youd had a December year end,you would have had much to do in a short time,

167、”OBrien explains.“Although schemes were trying to do a lot of preparatory work,there would still be things that werent quite done before their scheme year ended.”Such things might well include conducting aclimate scenario analysis,formalising governance policies and identifying how three climaterela

168、ted metrics will be measured.The first two metrics the total emissions of a schemes asset portfolio and its carbon footprint are dictated by the TCFD framework,but schemes have the freedom to choose a third that does not relate to emissions.Since the new rules took effect,the government has consulte

169、d on the inclusion of a fourth metric focused on how schemes investments are aligned with the netzero goals of the United Nations 2015 Paris accord on climate change.This is expected to be introduced from October this year.“The consultation suggested schemes already in scope of the TCFD requirements

170、 might choose to voluntarily use that as their third metric for the first year of compliance to effectively give them a dry run at it for next year,”says Simon Borhan,a managing associate in Linklaters pension funds group.Accessing data of sufficient quality will be a challenge for many schemes.Trus

171、tees should engage with their asset managers as soon as possible to ensure that the data provided is suitable,he advises.“The report is not something you can pull together in a week,so engaging early and gradually easing your way into compliance,rather than suddenly hitting a cliffedge at the end of

172、 the seven months,really helps.That might look like a long way away,but dont underestimate the amount of work required,”Borhan warns.Given that this is the first year of TCFD reporting,some schemes are unsure how Trustees are having to deal with a range of challenges as they get to grips with new ru

173、les on disclosing climate risks candid they need to be when disclosing where they have gaps in their data.“There is a bit of tentativeness at the moment,”says Helen Prior,client director at investment manager Cardano.“This is not because they want to hold anything back,but there is a sense that,if t

174、hey are really open and honest while others are not,it could make them look as though they havent got a good handle on this.”While schemes might be reluctant to highlight any shortcomings,it would be more damaging in the long run to misrepresent their position,she adds.“Everyone is in the same boat.

175、If you are honest about what youre still grappling with,you can frame it as a journey and say that you expect the quality of reporting to improve as better data and practices emerge.”Some trustees might also struggle with how to present their report,given that it has a wide range of potential reader

176、s,including regulators,scheme members and activist groups.That means that the first disclosures are likely to be quite hefty.“There will be a tendency to ensure that everything is covered and so produce very long reports,”OBrien says.“How much value that will be to scheme members is another matter.T

177、hese will be dense documents,full of jargon about scenario analysis,that wont be very readable.”To counter this,he recommends that schemes should produce the main report for the regulator and then create a more compact and comprehensible version for scheme members,which will direct them to the main

178、report if they are interested.Some trustees face another challenge:what happens when the data shows that certain parts of their asset portfolio have high carbon exposures?Jennifer ONeill,an associate partner and responsible investment consultant at Aon,calls this the divestment dilemma:do schemes si

179、mply exit funds that prove to be carbon intensive or do they engage with their investment managers in an effort to mitigate the risks?“Engagement is key,”she says.“While you need to reserve your right to exit if that isnt fruitful,engaging first,rather than making a snap decision predicated on one d

180、ata point without understanding the full context,is very important.”OBrien warns trustees to beware of treating TCFD reporting as a mere box ticking exercise and remember that climate change could have an adverse impact on their members investments.“Its important not to lose sight of the wood for th

181、e trees,”he stresses.“The regs are prescriptive,but the whole point of this is that trustees should be managing climate risk,as it presents a financial risk to their portfolios.Its quite easy to forget that and start measuring things just for the sake of measuring things.”MAY THE TASK FORCE BE WITH

182、YOUNumber of supporters of the Task Force on Climate-Related Financial DisclosuresTCFD,2021Ben EdwardsC L I M AT E R I S KM Engaging first,rather thanmaking a snap decision predicated on onedata point without understanding the full context,is very important20182019202020212.5k2k1.5k5001kTotal suppor

183、tersFinancial institutionsOther supporters0P E N S I O N S&R E T I R E M E N T06How to approach retirement saving,decade by decadeWhether youre 15 or 55,what steps should you taketo ensure that you and yours have best possible quality of life once your working days are over?hen should you start savi

184、ng for your pension and how can you get the best results?While such questions plague us all,the answers can vary depending on your age.For those who are younger,saving for a pension can seem like an impossibly distant concept,one that they often put off until later life.Its also,crucially,an attempt

185、 to hit a moving target,with the state pension age constantly shifting depending on the government in power and the countrys finances.For the middle aged,pensions can become an obsession.While it could spur dreams of an early retirement,it can also be the source of serious headaches,as juggling life

186、s outgoings competes with the urge to save for a rainy day.And,for those nearing retirement age,it can be a moment of bliss or sheer panic,depending on the size of your pot.Some parts of the future arent foreseeable.We know that the ballyhooed pension age rise in 2028 will have a material effect on

187、many of us.But,for those in their teenage years,retirement is long away,with plenty of chance for changes.To find out what people should be doing now,weve asked the experts.In your teensIt can be difficult to get teenagers to care about tomorrow,never mind 60 years from now.If you can encourage them

188、 to look to the future,convince them to think about saving.If you cant get them to care,go about it yourself.Adolescents as young as 13 are at an age tostart thinking about saving for the future,according to EmmaLou Montgomery,associate director at Fidelity International.For teenagers,“its more abou

189、t ensuring that they have a broad idea about what they want their future to look like”.Ask them about the career they might like to pursue or the milestones they would like to pass in adulthood,suggests Montgomery,who says:“Setting these goals and instilling healthy saving habits is a great way to b

190、oost confidence and improve their financial awareness and understanding of basic pensions saving,investments and money management.”The bank of mum and dad can help too if theres money to spare,she adds.“For parents,a junior individual savings account(ISA)is a taxefficient way to help start off your

191、childs future savings,because you pay no income tax or capital gains tax on those investments.Once your child reaches 18,they can access the money in their junior ISA and decide how they want to spend it or reinvest it for the future.”Once someone enters the world of work,its important to enrol on a

192、n employers pension scheme,says Victoria Ross,chartered financial planner at Progeny.This helps them to benefit from any contributions that the employer is obliged to pay.“Check to see if your employer will match your higher contributions,as this would be the easiest way to boost your retirement sav

193、ings,”Ross advises.In your 20sThe ageold advice still stands:when it comes to setting up your pension plan,the earlier you do it,the better.“The compound benefit of saving regularly over time is vital to building up your wealth,”says Roy Thompson,head of financial services at Carpenter Box Financial

194、 Advisers.As with those aged under 20,employees should ask to opt into a work scheme and see if they can forgo some luxuries to maximise contributions.If youre selfemployed,like an increasing number of people in this age group,you should still consider a private pension contribution.Its important to

195、 get into the habit of putting aside money for later.“Saving for the future while in your 20s may feel particularly tough in the current climate,with household bills,rent payments and general daytoday costs all going up,”Montgomery says.“But that doesnt mean its any less important.What you do now wi

196、ll hold great bearing on your future,so its about thinking cleverly about how you can navigate how much money you need for daytoday spending while working towards your future.”Take,for instance,someone investing 100 a month into a pension pot from the age of 25.By the time they retire,theyll“Autoenr

197、olment applies only to those aged 22plus earning more than 10,000 a year,so under that age and income you may have to opt in,”she warns.Those earning more than 520 a month in the scheme have a minimum pension contribution of 8%.The typical breakdown is 5%from the employee and 3%from the employer,but

198、 some employers will pay in more than this minimum.Chris Stokel-Walker The compound benefit of saving regularly over time is vital to building up your wealthS T R AT E GYWCommercial featureHow to simplify pension decision-makingRetirement can be difficult to navigate.Pensions management tools can he

199、lp keep it simpleaking sense of retirement options can be difficult at the best of times.There are many ways that people can choose to receive their income from their pension savings when they stop working,including taking out an annuity or going down the flexible retire-ment route,where they take c

200、ontrol of their own income.Thats why its key to provide pension scheme members approaching retirement and retirees with the right tools to help them make informed decisions about what happens with their pension savings.The UK government introduced auto enrolment in 2012 to remove the barri-ers from

201、saving for retirement by requir-ing all employers to establish a workplace pension which their employees automati-cally join and receive employer contribu-tions towards.It makes saving for a pen-sion easier because the employee doesnt need to worry about joining a scheme,determine how much of and wh

202、ere their money is being invested.The problem is,though,that as people near retirement,they have to consider a host of different factors related to their pension(s).They must think about how large their pension pot will be when they retire,how much income they need to receive when they stop working,

203、how long they might live,and how they are going to bridge the gap between the income they live off now and what they will need to live on in the future.With a defined benefit scheme,these difficult decisions are taken out of individ-uals hands by the teams of professionals that run their pension sch

204、emes,including actuaries,investment advisors and man-agers and sponsor employers,who protect scheme members retirement money.In a defined contribution scheme,using a flex-ible retirement solution,members have to make all of these decisions themselves.But compounding this is the common problem of hav

205、ing multiple pension schemes with different employers and different pension providers.Because the funds are held in different places,people may find it challenging to assess the com-plete value of their pension.To help people understand their pen-sions better,SEI has built an open banking app in con

206、junction with Moneyhub.If the user has more than one pension scheme,the app enables them to consolidate all their benefits in one place and see their financial net worth.This app also provides members with models to calculate how much they need to have in their pension pot if they want to draw a set

207、 income for a set period.Similarly,if they have a certain amount of funds and have estimated they are going to live for a certain period of time,and taking into account investment growth,they can work out how much they will receive per month,quarter or year.The app also allows users to set the amoun

208、t they receive on a monthly basis and will send out an alert if their outgo-ings exceed that income.They can then top up that income to make sure theres enough money in their current account,while ensuring their pension funds dont become depleted and remain held in a tax efficient environment.Import

209、ant Information This article has been created in relation to the SEI Master Trust,an occupational pension scheme which is authorised by the Pensions Regulator.This article is issued and approved by SEI Investments(Europe)Ltd(“SIEL”)1st Floor,Alphabeta,14-18 Finsbury Square,London EC2A 1BR.This artic

210、le and its con-tents are directed at persons who have been cate-gorised by SIEL as a Professional Client and is not for further distribution.SIEL is authorised and regulated by the Financial Conduct Authority.While consider-able care has been taken to ensure the information contained within this art

211、icle is accurate and up-to-date and complies with relevant legislation and reg-ulations,no warranty is given and no representation is made,as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the bas

212、is of this information.The information in this article is for general information purposes only and does not constitute investment advice.You should read all the investment information and details on the funds before making investment choices.If you are in any doubt about whether or how to invest,yo

213、u should seek independent advice before making any decisions.Investment in the range of the SEI Master Trusts funds are intended as a long-term investment.The value of an investment and any income from it can go down as well as up.Investors may not get back the original amount invested.This document

214、 and its contents are for Institutional Investors only and not for further distribution.SEI also provides in-person and online support to help members confidently make complex pension decisions.That includes face-to-face meetings and sem-inars designed for people reaching retire-ment to get them thi

215、nking about how much they have in their pension,what sort of income they might need when they stop working and whether they can save more.Retirement does present people with a number of challenges,particularly around understanding and managing multiple sources of pension savings,but with inte-grated

216、 tools like the app SEI provides its members,the pension landscape can be more easily navigated.For more information on SEIs master trust solution or help with your retirement needs,visit Its key to provide pension scheme members approaching retirement and retirees with the right tools to help them

217、make informed decisionsR A C O N T E U R.N E T07Commercial features investors ramp up pressure on developed market compa-nies to improve their environ-mental,social and governance(ESG)credentials,emerging market com-panies could be at risk of being left behind to the detriment of everyone.“We cant s

218、olve the carbon crisis without taking emerging markets along,”says Lars Hagenbuch,an invest-ment consultant at global investment firm RisCura.Emerging markets are the factories of the world.Most of the manufactured goods we buy are connected in some way to emerging markets.The raw mate-rials might b

219、e sourced there,the parts were made there or they were assem-bled in an emerging market country.We need emerging market compa-nies to continue making the products we require and take for granted every day.Transitioning those companies to a lower-carbon world wont be easy and it will be expensive.Com

220、panies cant simply stop and start from scratch,they need to invest in more environmentally friendly methods of production,while simultaneously keeping their produc-tion lines running.That requires addi-tional capital.At the same time,simply shutting down certain heavy-polluting industries could leav

221、e vast numbers of workers without jobs.Which brings in another key ele-ment:the number of people impacted.Emerging markets account for the big-gest share of the global populationabout 85%,according to the IMF.Some of those countries are likely to be dis-proportionately impacted by climate change,suc

222、h as in Southeast Asia(from severe floods)or Southern Africa(from temperature increases).“Without engaging with emerging markets companies and policymakers,the carbon transition will be impossi-ble and the rest of us will be faced with significant changes to how we live our lives,”Hagenbuch says.On

223、average,emerging markets have poorer populations than developed markets.Their needs are likely to be more basic as well,meaning carbon neutrality is a lower priority.“For many,the energy transition is far away,”says Hagenbuch.“They accept smoke coming out of the smokestack because that smokestack re

224、presents their livelihood.They cant afford elec-tric cars.They may not be as worried about decarbonisation as in the devel-oped world.On a per person basis they also have a point:emerging markets emit a lot less carbon per capita than the developed nations.”Different emerging market econo-mies are l

225、ikely to have different priori-ties around ESG.For instance,in South Africa the focus is more on the social aspect given widespread unemploy-ment and historic underinvestment in education.By comparison,in neigh-bouring Mozambique,they might care far more about the environment given that millions of

226、people are at risk of flooding.“The occasional corporate govern-ance failure might not even register with the average citizen,”Hagenbuch says.In certain jurisdictions,ESG topics can be politically contentious.In China,for instance,it may be difficult for asset managers to raise some social issues,su

227、ch as allegations of forced labour.“Regardless of what they personally feel and believe,a Chinese fund manager may struggle to shout loudly that some-thing is wrongthe consequence for them might be prison,”says Hagenbuch.That underscores the potential chal-lenges that investors face when tack-ling E

228、SG issues in emerging markets.But it also highlights an important aspect of investing in developing econ-omies:fund managers should engage with companies rather than simply divest from positions where ESG stand-ards might be lower.“When you rely too much on data it can drive you to an exclusionary m

229、odel,”says Hagenbuch.“You steer clear of investments that show up poorly on rankings,which may be appropriate when avoiding tobacco or coal or weap-ons,but the minute you exclude some-thing from your portfolio,you lose the chance to make a difference.”That can be especially detrimental if the person

230、 who buys the shares from you is less scrupulous and doesnt care if a company is,say,pumping sewage into the Ganges.“If you are not around to raise the concerns at the boardroom table or at shareholder meetings,then stew-ardship is worse as a result,”says Hagenbuch.“We believe its very impor-tant to

231、 engage rather than to exclude.“Our role at RisCura,as an emerging market investment specialist with a core belief in responsible investing,is to give guidance to the asset managers that we recommend to our clients on how they should engage with underlying compa-nies and what is global best practice

232、.”While some managers might be tempted to offload their positions rather than engage,there are only lim-ited benefits to divestment.“If everybody sells the shares of a particular company then that company may find it harder to raise new capital and its cost of capital goes up,so there is an indirect

233、 impact to the cost of run-ning the business,”says Hagenbuch.“But you would have had much greater influence if you had remained a share-holder and turned up at the sharehold-ers meeting and said you are not happy about A,B or Cdo something about it.”Accessing ESG-related data is also more of a chall

234、enge in some emerging market countries,particularly if there are no regulatory requirements for companies to collect and publish data.In circumstances where data quality is constrained,investors should instead focus on the trajectory of improve-ments companies are making rather than specific numbers

235、,Hagenbuch says.The extent to which emerging market economies are committed to ESG tar-gets also varies.China,the single larg-est polluter,has pledged to meet net zero by 2060,with some cities having even more ambitious goals.Shenzhen,which has the worlds biggest fleet of electric buses,intends to b

236、e net zero by 2030.Other countries are less moti-vated to tackle ESG issues or simply lack the resources to enforce policies.Where there is an absence of govern-ment or consumer pressure to effect change,the onus for fund managers to engage with companies is even greater.“In some cases you might be

237、lucky and youre dealing with multinational companies that are operating in these areas and where pressure from London or New York to avoid ESG-related fail-ures can cause a change in corporate behaviour,”Hagenbuch says.“But patience and effective coordination directed towards emerging market compani

238、es can pay off.There might be only a handful of companies responsi-ble for a large proportion of emissions in a particular country,so you can make a big difference by just targeting one or two of them.”By advocating for tougher corpo-rate ESG standards in emerging mar-kets,fund managers can potentia

239、lly move the needle on decarbonisation in developing economies and ensure no countries are left behind.Visit investment specialists RisCura at to help map your responsible investing journey in emerging marketsTackling carbon emissions in emerging markets Asset owners and fund managers need to engage

240、 with companies on ESG matters in the developing world,rather than simply avoiding those with poor credentials,says RisCuras Lars HagenbuchCommercial featureA We cant solve the carbon crisis without taking emerging markets along11 billion203020352040204520502055206020652070LaterNo targetAnnual C02 e

241、missions in 2020(tonnes)Net Zero Commitment date ROADMAP TO NET ZERO10 billion9 billion8 billion7 billion6 billion5 billion4 billion3 billion2 billion1 billion0 billionChina United StatesEmergingDevelopedIndiaRussiaJapanIranGermanyBangladeshSaudi ArabiaUKRisCura sourced from ,and ourworldindata.orgF

242、or those lucky enough to be earning a high salary by this age,pension contributions can become a taxeasing strategy.If youre earning more than 50,271 a year,you are currently in the highest income taxband.Contributing to a pension could help you to obtain tax relief of up to 40%.If youre earning mor

243、e than 100,000 a year,you could lose your first 12,570 of personal allowance of taxfree income,but“pension contributions can potentially help retain this by bringing your taxable income back down”,Ross says.Your 30s are also likely a time when youll be thinking about big life decisions,including pot

244、entially starting a family.“This is the most difficult time of life,”Dagless argues.“Youve got mortgage pressures,family pressures,everything.”Parental leave and the additional cost of rearing a child can make your pension contributions slightly haphazard.“There are steps you can take to ensure that

245、 any time you take away from work doesnt adversely affect your retirement savings,”Montgomery says.“For example,you could choose to pay in extra in the runup to your leave,you could encourage your partner to pay into your pension while you arent earning or you could make use of the carry forward rul

246、es once youre back in work.”Whatever you do,ensure that you dont lose track of the importance of your pension.With so many competing interests,it can be easy to allow planning for the longer term to take a back seat.But,given average life expectancies,those currently in their 30s are likely to have

247、20 or more have saved 48,000 for their pension.You could achieve the same base amount of money by starting to save 20 years later,at the age of 45,and putting in 200 a month.But compound interest would mean that the 25yearolds pension pot would be nearly twice as big,assuming a 5%annual return.“Youn

248、ger people have the power of compounding on their side,whereas 40 or 50yearolds no longer have that time,”notes Zoe Dagless,senior financial planner at Vanguard UK.“As much as people in their 20s might think its not that powerful,it will get them a long way once they are 65 compared with starting th

249、at planning at the age of 40.”A stocks and shares ISA can be set up with contributions as low as 25 a month and a ceiling of 20,000 taxfree a year.“By putting away a small amount each month,you can soon build a substantial pot,”Montgomery says.Thats especially true in the current climate,where the s

250、tock market is on an upswing.The same attitude that may make people in this decade reluctant to even think about pensions could potentially help them embrace slightly higherrisk investment options:if markets collapse,youve still got 30 years or more of your working life to rebuild your pension pot.F

251、or those worried about making losses,Dagless recommends trying to put away cash while not looking too closely at the dips.In the long run,theyre still likely to benefit.But dont throw caution to the wind.Thinking about your attitude to risk at this age is key,according to Thompson.“History suggests

252、that a higher investment risk would be rewarded over the long term,although this is not guaranteed or suitable for everyone,”he says.“Younger individuals should engage with investment risk and educate themselves on it.”In your 30sIf youve put a smart strategy in place to accumulate a pension pot,thi

253、s decade is where things should really start to build up steam.Workers may well have switched jobs several times by this point of their careers and started a number of occupational pension schemes.You should think about amalgamating pension plans into a single collection to reduce the administrative

254、 burden and paperwork involved.But be careful:some plans will charge you to move your money,which can counteract any benefits,Thompson warns.years in retirement,which means saving up plenty to make sure that your standard of life doesnt take a big hit when you leave the world of paid employment.In y

255、our 40s People in their 40s shouldnt necessarily pursue the same strategies that worked for them in the previous two decades of work.At this point,their pension priorities are likely to differ significantly from those that they had before.Montgomery recommends considering a selfinvested personal pen

256、sion(Sipp)to supercharge saving towards your retirement.Its simple to open one and you can dripfeed investments into it from as little as 20 a month.“With a Sipp you choose where your money is invested,giving you control over your pension,”she says.“You might also be able to transfer existing pensio

257、ns you have into the Sipp,making it easier to see how your savings are growing.”Higher earners will want to be cautious at this age,taking stock of their pension plans and ensuring they dont get close to their lifetime allowance of 1,073,100 in pension savings.Anything above that amount could be sub

258、ject to significant taxation upon retirement,diminishing all the hard work youve put into saving over the years when you want the money most.“If youre in this situation,you can also look at protection options that,although restricted,will give you your own lifetime allowance,”Montgomery says.Socalle

259、d taxefficient wrappers,which insulate your cash from taxation(such as ISAs or pensions),can become more beneficial at this age for higher earners or those who have already amassed a significant pension pot,says Ross,who suggests seeking financial advice for the best possible strategy.Your 40s are a

260、lso the time to start making big decisions.Thinking about your retirement goals in this decade is crucial,Thompson says.When do you want to stop working?What kind of life do you want in your retirement?Are you looking for a quiet time or a neverending parade of roundtheworld cruises?The answers to a

261、ll these questions can help to pinpoint what kind of income youll need when the time comes to stop working.“By looking at what savings an individual already has,a cohesive savings plan can be put together that looks at the suitable level of risk for investments as that person moves towards retiremen

262、t,and a quantum of pension payments to build the required sum,”he says.In your 50sThis decade is one to tie up loose ends and ensure things are steady as they go.Any risky bets made in your 20s or 30s should now be unwound and made safer.“People are approaching a time when they will be relying on pe

263、nsion assets to deliver an income,”Thompson says.Its not the time for big bets that can go wrong.It may also be worth thinking about consolidating pension plans again,says Ross,who adds:“Legacy pensions may no longer be appropriately invested or at a suitable cost.”Theres also the question of when t

264、o take a lump sum from your pension(or whether doing so is the best option).This is currently available to people aged 55,but the threshold is set to rise to 57 in 2028.Before doing so,its important to audit what youre likely to get from your state pension.If there are any shortfalls that could scup

265、per your plans and give you a smaller sum than expected,see whether making extra contributions might fill the gap.But there is only so much you can do at this stage,warns Thompson,who adds:“Having an understanding about how pension benefits can be taken is essential.Several options are now available

266、 and there is no silver bullet.”WHAT CONVINCES US TO START SAVING FOR RETIREMENT?Share of UK consumers citing the following as decisive factors Its about thinking cleverlyabout how you cannavigate how muchmoney you need forday-to-day spending while working towardsyour futureI was enrolled automatica

267、llyMy employer started paying into a pension for meI started a familyMy employer offered a matching contribution to its pension planI bought my first homeI turned a certain ageI started a new(not first)jobI started my first jobI got marriedI got separated/divorcedI paid off my student loanI received

268、 a pay riseI lost my job21%22%9%15%6%21%7%10%6%5%3%5%3%Aegon,2020MOST SAVERS ARENT ON PACEExpectations of retirement savings among UK adultsAegon,2020Not on course,or dont know if on course to achieve necessary retirement incomeOn course to achieve necessary level of retirement income76%24%P E N S I

269、 O N S&R E T I R E M E N T08CONSUMERSPENSION PROVIDERSSPRING 2022SUMMER 20222023The future isnow:techs effects on all our pensionsThe industry is developing apace,with new technologies presenting opportunities for savers and challenges for providers.Hereare some of the emerging trends to keep tabs o

270、nechnology is transforming our financial lives,with pensions no exception.What are the big trends on the horizon,and how can savers,managers and companies prepare for the future?The sector has seen a range of changes in recent years.Perhaps most notably,there are more younger savers than ever before

271、:members of generation Z are more likely to have joined a pension scheme than millennials and baby boomers at the same age,according to PensionBee.This techsavvy generation is entering a sector thats undergoing a rapid evolution,making the whole process of starting a pension,funding it and monitorin

272、g its progress far easier than it ever has been.Take consolidation,for instance.This has grown in importance as the world of work has changed.The old concept of a job for life is now far from the norm.In the 10 years to 2017,the average UK worker spent just under five years with an employer,while so

273、me 9million Britons have changed jobs since the start of the pandemic.In that context,the consolidation of legacy funds has become big business.Older retirement savers are particularly likely to have accumulated numerous pension pots with previous employers.Reminding them to follow this up is crucia

274、l.Other changes are helping less savvy savers to top up their funds without much active decisionmaking.For instance,as an offshoot of the trend for personalisation,automatic roundups will,as their name suggests,round up contributions on a set date,while the autoescalation function will increase them

275、 over a given period.“Autoescalation is the next step after automatic roundups,”observes the founder and CEO of PensionBee,Romi Savova.“This is likely to have a more significant impact over the long term.”With state pension provision looking increasingly shaky,more consumers are educating themselves

276、 about their pension options.Personalisation is vital,as savers take ownership of their financial futures.Enhancing the digital provision of pension information helps people to forecast what they will need to save by when.Even pensionage savers are now more open to digital interactions,with one in e

277、very three over75s opening a new online account during the UKs Covid lockdowns,according to GBG,a digital ID specialist.“By arming savers with easily accessible,uptodate information,we might finally be able to dispel the belief that pensions are too complex to engage with or relevant only at a certa

278、in age,”Savova says.Lastly,tech is helping to tackle pension fraud,using measures ranging from secure identity checks to bankgrade encryption.Biometrics are also proving a particularly essential tool in combating crime,notes Spencer Lynch,director of innovation,wealth,life and pensions at GBG.“It gi

279、ves funds and administrators more confidence that they are actually engaging Nichi Hodgson By arming savers with easily accessible,up-to-date information,we might finally be able to dispel the belief that pensions are too complexTHE DASH IS ONThe proposed schedule for the UK Pensions Dashboards Prog

280、rammeaT E C H N O L O GYTTodays consumers are,arguably,more conscious than ever about the ethical credentials of their pension funds.Thelong-promised pensions dashboard could help them to choose and monitor their investments more effectively.The pensions dashboard is a technology ecosystem that will

281、 show a saver all their pensions information online in a secure manner.With pensionfund investments in the UK amounting to more than$3.59tn as of 2020,this piece of pensions tech presents an opportunity,according to Moneyhubs CEO,Samantha Seaton.“Dashboards that provide essential information to save

282、rs on the value of their pension,the cost of that pension and the underlying holdings,and what that means for people and the planet are an incredible chance to change the way we all engage with our long-term savings,”she says.“This is brilliant for savers and the wider impact for good that pension f

283、unds can have.”With better engagement and education,the pensions dashboard could eventually provide a“two-way exchange of information”,says Tom Skinner,co-founder and financial planning director at Barnaby Cecil.“Platforms could then gather information about how investors want their money to be used

284、,which should mean investment products are provided that are a closer match to an individuals ethical requirements.”Based on the use of similar dashboards in other countries,all pension schemes are likely to receive at least 20,000 find requests a day,or one every couple of seconds,once the system i

285、s operational.The industry needs to be ready to deal with this volume of enquiries.In the immediate future,it seems the reach of the dashboard will extend only to providing accurate information about a savers holdings at any time.But,in the longer term,it should prompt more questions from savers abo

286、ut exactly where that money is being invested.Pensions dashboards PDP,2021Early voluntary data providers are connected for testingThe regulatory framework isestablishedStaged compulsory onboarding startsEarly consumer testing startswith the member at any given time,”he says.This also complements the

287、 trend for personalisation,with younger savers less resistant to it from a privacy point of view.What will these advances mean for all parties?To make a real impact,they must help savers to visualise what retirement actually looks like,says Damian Stancombe,a partner at Barnett Waddingham.This deman

288、d relates not only to investments but also to“what retirement is financially,physically and mentally”,he argues.“Its not all monetary.If we havent been there yet,how can we know what it looks like?”Empowering savers might benefit them but it could increase the industrys costs.“Platforms may be givin

289、g members far more control,but businesses need to be mindful of that power,”Stancombe warns.“If a member makes a poor decision,say,this could open an organisation up to fault claims and class actions.”Too many companies and plan managers are underprepared forthe pensiontech revolution,argues Samanth

290、a Seaton,CEO of Moneyhub.“They arent thinking about the savers,”she says,noting that the Financial Conduct Authority is set to bring in a new consumer duty in July.This is designed to encourage a higher level of consumer protection in retail financial markets.Such a measure,Seaton adds,“speaks volumes about how slow plan managers and companies are at responding to savers needs”.Testing with about 2,000 users startsLarge-scale consumer testing starts