The influence and importance of ESG on investment markets seems to grow daily. This is unlikely to alter given the US is re-joining the Paris Climate Accord and Glasgow is hosting The United Nations Climate Change Conference in November.
Against this background Cushon has pulled off a major coup in launching the world’s first net-zero pension, through offsetting, alongside an interactive app which allows members to see all their Cushon pensions, other savings and investments in one place.
Other organisations are making positive noises about their ESG credentials although many are talking of dates as far away as 2030 or even 2050 to achieve net zero emissions.
Cushon is the latest of a new range of workplace pension propositions that give employees both wider savings choice and tools to help them make better savings decisions.
This service may be particularly attractive to corporate advice firms as this now gives them easy access to workplace pensions which can potentially compete with the enhanced products being offered by the largest employee benefits consultants, most notably Aon and Mercer.
This functionality is available now to all the firm’s new customers. Last year Cushon acquired the Salvus Master Trust and will be rolling out these services to the 70,000 members of the scheme at the end of February/early March.
In addition to its workplace pension contract Cushon also offers savers access to Isa, Lifetime Isa, Junior Isa and general investment account wrappers. All of these can be added to the retirement account for lump-sum and regular contributions direct from the mobile app and payroll. Users can also initiate transfers and consolidation from other savings platforms via the app.
Subject to any employer requirements and auto enrolment minimums, individual savers can choose to redirect employer contributions into any of the above additional wrappers.
It’s not hard to see for example a Lifetime Isa might be far more attractive to younger savers keen to buy their first home as soon as possible, than a pension. By comparison, the offerings from the big three master trusts, Nest, The People’s Pension and Now: Pensions increasingly look a long way short of fit for purpose.
Historically Nest has made much of its own environmental investment credentials, however this move by Cushon really puts it in the shade. It should be recognised that Nest was only ever set up to be a provider of last resort, so the government could guarantee that all employers would be able to offer workplace pensions to their staff. It was this need that justified the near £800 million pound loan made to set up the organisation which might otherwise have breached state support rules.
With the Nest website boasting the trust has over 9.5 million members that is an awful lot of people stuck in a one-size-fits all retirement vehicle pension scheme. Nest does have its sidecar savings arrangement but that structure is a long way short of the flexibility offered by firms like Cushon.
With a growing range of alternatives like Cushon available this must represent a wonderful opportunity for advisers to encourage employees to switch to better products for the staff. The FCA’s move to accelerate investment transfers should also catalyse this activity. If I were an adviser with any significant schemes with older style master trusts I would want to be moving them away fast before Aon or Mercer come across the opportunity as their own-built propositions are far ahead of them.
While the old guard of the master trust movement continue to pedal poor pensions to employers who failed to take advice when setting up the schemes, as a growing number of superior alternatives are readily available, is it not time for the corporate adviser community to actively engage to help employers understand that there are far better options available?
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