Rewiring
Retirement

For professional clients only.

[00:00:00]

Sophie:

Welcome to PensionShip, the podcast series from BlackRock for professional investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market. I’m your host, Sophie Dapin, and I’m delighted to be joined again by Muirinn O’Neill, who leads on retirement policy at BlackRock.

[00:00:21]

Muirinn:

Hi, Sophie.

[00:00:22]

Sophie:

And Adam Baker, who leads on solutions for defined benefit clients at BlackRock.

[00:00:27]

Adam:

Thank you for having me on.

[00:00:28]

Sophie:

Defined benefit, or DB, pensions are a really important and large part of the UK pensions market. When we last spoke, we talked about the change that we’re seeing in this space: funding levels improving, the introduction of the new DB funding code, superfunds and the renewed focus on unlocking surplus funds for investment in the broader economy. Since then, we’ve seen the pensions bill, and there are some really interesting developments for DB schemes. So Muirinn, can we start with a summary? Tell us what’s happening, what are the timelines and what change can we expect to see from a policy perspective?

[00:01:03]

Muirinn:

Thanks, Sophie. And I think one thing to say from the outset is that in this series, we’ve been talking a lot about some of the changes in Defined Contribution (DC) and Local Government Pension Scheme (LGPS). And I think one of the points that we’ve stressed repeatedly is that a lot of these changes are happening very fast and all at once. I think that was the last podcast we were talking about the March 2026 deadline for LGPS to do their entire transition. I think it’s fair to say in DB we’re moving slightly more slowly, slightly more tentatively and slightly more in a consultative manner.

[00:01:35]

Sophie:

Why is it so much slower than in the other areas?

[00:01:38]

Muirinn:

I think there are two main drivers for this. If you think about the funding journey that we’ve been on with DB, if we think back five years before that, the sort of deficits that we were seeing, I think government is very mindful of that fact and the fact that we’ve been on a bit of a journey and we’re now in a good position, and I don’t think they want to do anything that moves things too much and might upset that balance.

And I think on top of that, the other kind of driver here is DB schemes are one of the biggest buyers of UK government debt, and they have to be mindful of the fiscal environment when they’re making changes. And I think that’s a point that they’ve stressed repeatedly: that stability of the gilt market is of utmost importance to them and so they are a bit more consultative and tentative in their changes around the DB framework.

[00:02:25]

Sophie:

And at a very high level, what kind of changes are we expecting to come through?

[00:02:29]

Muirinn:

I’d say there are two main changes that we’re going to see in the Pension Schemes Bill. So it introduces a new legislative framework for superfunds, which feels like we’ve been discussing for a very long time, but we are going to finally get a legislative framework in 2028. And then we’re also going to have a new regime for surplus sharing and extraction. And again, that’s going to be up and running in around 2027, 2028.

[00:02:54]

Sophie:

I think this is a really interesting point because there’s almost like this expanded menu now for DB schemes. It used to be that pretty much the majority of schemes would look to insurance buyouts. Now there’s kind of superfunds, surplus extraction, other options. Adam, you spend all day every day with DB pension schemes. What do you see with this expanding menu of options?

[00:03:17]

Adam:

Yeah, you’re spot on. The menu’s definitely expanding quite a bit. The route to buyout remains pretty active, even if volumes in 2025 are a little bit down on 2024. That’s largely been driven by the upper end of mega-deals in the market, where we’ve seen fewer, but equally, the smaller end of the market has seen some pretty striking growth. So a lot of those smaller schemes going through to buyout. And this is relatively logical because that’s where the costs of running on are proportionately higher, but it’s still a pretty noteworthy trend. So it’s unsurprising that buyout remains popular. But as you exactly said, it’s not the only show in town anymore, and it’s been quite exciting to see a number of new innovations. So the new superfund deals that have gone through, but also new superfund launches.

[00:03:57]

Sophie:

And this is really significant because, to Muirinn’s point, we’ve been talking about superfunds for a long time. Even a few years ago, the idea of an actual superfund deal happening was really significant. And now we’ve actually seen a handful of these. You don’t want to understate how important this is for the market.

[00:04:11]

Adam:

Exactly. It’s a recurring topic, but one that we’ve certainly seen some material progress on recently. So there’s been a handful of transactions from Clara using their approach of a superfund as a bridge to buyout. But it’s also noteworthy to see new entrants, such as TPT, launching a superfund that’s more geared towards running on. So those superfunds have that real potential to add more flexibility to trustees and to sponsors who may not wish to or may not be able to pay the requisite premium to insurers, but are still interested in exploring some of these sort of capital-backed solutions that can help get them towards their desired end game.

But I think alongside this well-trodden path to buyout and the changes that we’re seeing in the evolution of the superfund space, probably the most striking change of all is what Muirinn mentioned, which is this progress in legislation and frameworks towards surplus sharing. So today it’s most readily accessible for schemes that have mixed DB and DC trusts. So is there a way they can use any surplus in the DB scheme to help fund their DC contributions, for example? But we can see that legislation evolving even further to create additional avenues to use that surplus generated for schemes even that don’t have that common trust set up.

[00:05:16]

Sophie:

So Muirinn, what are the actual changes in the regulation to allow surplus to potentially be released?

[00:05:23]

Muirinn: So we have a number of proposed changes as well as some changes that have already come in. So in terms of changes that have already come in, we had a tax reduction on surplus extraction. So it used to be taxed at 35% and from April 2024 that went down to 25%.

[00:05:38]

Sophie: So that’s to try and incentivise companies to want to do this.

[00:05:39]

Muirinn:

Yeah, to make it less expensive to do. And then we’ve had a number of proposed changes. To my earlier point, I would note that the government’s language around this is a lot more tentative. So it’s things like “we’re minded to do this,” “we will discuss this with industry subject to consultation,” which, as we’ve discussed previously, is not the type of language they’ve necessarily used in relation to DC.

But there are a number of proposed changes. So, government is proposing a statutory override, which will allow pension trustees to make surplus payments to sponsoring employers, even if their scheme doesn’t permit that at the moment.

[00:06:15]

Sophie:

And that’s quite significant, isn’t it? The idea that it can override what has already been in place for a scheme?

[00:06:20]

Muirinn: Yes, and the fact that trustees have that decision and they can do so long as they’re comfortable that it’s in their members’ interests, which is a really important part of all of this. And then the other change, which I think has been quite interesting and gotten quite a lot of reaction in industry, is the redefined funding threshold for surplus sharing. So previously, you had to be funded on a better than buyout basis in order to do any form of surplus extraction. That is now moving to funding on a low dependency basis, which is a much more, I would say, permissive regime than people might have expected.

[00:06:53]

Sophie:

So it’s lowering the bar at the point at which you’re able to extract—

[00:06:55]

Muirinn:

Yes, and I think when we first started this conversation, we wouldn’t have necessarily predicted that the government would be as open to some of that. But I think it all comes back to the conversation that we’ve been having throughout this series about the two drivers here. So there are those structural conversations and the fact that the system needed some updating, which we’ve mentioned previously. But there’s also the government’s focus on growth, and that’s a big part of the story. If you look at the government communications around surplus extraction, a lot of that has focused on how that is linked to growth, and how this is money that can be invested back into businesses. I think the figure that they have repeatedly used is £160 billion, which I think for a lot of people feels quite high. I’m looking at Adam. I don’t know if you also feel like £160 billion feels very optimistic?

[00:07:51]

Adam:

Yeah, I think that’s looking across the whole population of schemes. And really the fact that we are seeing some of the smaller end of the market look towards buyouts, as that preferred route will help mitigate some of that and take some of that £160 billion away.

[00:08:03]

Muirinn:

Yeah, so I think the way that they are thinking about this is as a possible route to more investment. And so that kind of explains why they have been a little bit more permissive than we probably would have thought at the start of this journey.

[00:08:16]

Sophie:

I think one of the really interesting things around surface extraction is, how do you do this in a way that’s fair to members? How do you balance all the different kinds of competing needs and requirements? Adam, how should schemes think about surplus attraction?

[00:08:31]

Adam:

Yeah, it’s a great question. And I guess the first thing, even before we delve into it, is taking a step back and reminding ourselves how much of a positive development we seem to be able to be asking ourselves these sort of questions. Lots of schemes have moved from a point of really focusing on managing deficits to a point they’re managing surplus.

So that surplus is hugely beneficial and it can be seen as a strategic asset for these schemes. It opens up a much broader set of choices for trustees and for sponsors alike. So we think it’s worth being very deliberate and considered when you look through that and to look at it through three lenses: purpose, partnership and process.

[00:09:03]

Sophie:

Easy to remember, three Ps.

[00:09:05]

Adam:

We like making it easy to remember and catchy. The three Ps is exactly right. So I guess if we go through them in turn, purpose is the first one. What’s the surplus for? It’s a really important and key question, and really thinking about that drives everything else. So are you looking to try and generate surplus to enhance member benefits? Are you looking to support DC outcomes? Or perhaps it’s around reinvesting in the sponsor’s business, or possibly a combination of all of these.

If we then move on to think about partnership, as with most things, it works best when there is a genuinely collaborative discussion across trustees, sponsors and all other stakeholders. So setting those clear thresholds and governance protections is incredibly important, and that’s what ensures that the member outcomes are protected, which we think is absolutely fundamental to all discussions around surplus extraction.

And then finally, the third P, on process. So we think too often that buyout and run on can be framed as a really simple binary choice, an either/or. And we think this is oversimplifying things. Surplus generation can be really important both as a pathway to buyout, but also as a credible alternative, whether it’s in the shorter term or even over much longer horizons. Working out how you decide on that preferred strategy and how to potentially pivot shouldn’t be a one-off conversation. It should be something that you continue to assess on an ongoing basis. We think there’s quite a lot of schemes out there who might eventually go to the buyout market, but for various reasons they don’t want to do it quite yet. Maybe it’s a young scheme with lots of active members who are relatively more expensive to insure. Or maybe there’s a desire to maintain a bit more control over potential benefit uplifts for a little bit longer. So from an investment perspective, the optimal portfolios for generating surplus whilst running on and for preparing to go to buyout can look really quite different.

Now, we’ve written about this. We had a paper out there called “Mind the Surplus”, which I encourage people to read. We’ve worked with a lot of our clients and their advisors to go through the implications of this and really trying to help people understand the opportunity cost here to maintaining the flexibility of moving quickly to buyout, and we think it’s really important for schemes to think about this in more detail. It’s not something that we would be evangelical about and prescribe one-size-fits-all, because it really depends on the scheme itself – on their structure, their funding level, the sponsor covenant, the stakeholder objectives, the size that we talked around as well. But making sure there’s really deliberate thought around that trade-off in place, we think is critical, because if not, you might be leaving some value, some return on the table that could generate surplus that you could then use for a really beneficial purpose for all of those stakeholders.

[00:11:18]

Sophie:

So we like to finish our podcast with predictions. So when we listen back on this podcast in many years’ time, we want to hear what you think the DB market will look like. Muirinn, shall we start with you?

*Forecasts/Estimates may not come to pass.

[00:11:31]

Muirinn:

I think what I would underline is that we are going to see a pretty thorough consultation process, but I think there’s a lot of scope for industry to feed in, for people to have a conversation with government to shape these regulations. And so it’s worth thinking about what you want to do right now, because they’re going to be consulting on this but if you have a sort of idea of what this might look like, what it might look like for your members, what sort of surplus sharing you have in mind, that’s something that you could discuss with government and help shape these regulations. So I think we are likely to see a very consultative process.

[00:12:10]

Sophie:

Great. Adam?

[00:12:11]

Adam:

I’m going to cheat a little bit as well and give you predictions that span all three parts, those end-game landscapes that we talked about. So buyout, superfunds and run on.

[00:12:18]

Sophie:

Very detailed prediction.

[00:12:20]

Adam:

I know I’m just hogging the microphone here, but I think for the buyout side, we might not see any new entrants or many more new entrants now. We’re already in double figures, but I think we’ll see some real competition among those existing insurers, and that will show up in some of the solutions and potentially drive a bit more innovation around both pricing, but equally the execution, how schemes really look about making that transition to buyout.

I think for superfunds, I think we’ll see even more evolution in the capital-backed space here. That’s where you could potentially see more new entrants. And I think you’ll also see a much clearer role emerging for how these vehicles really sit in the overall market architecture and ecosystem.

And then for run on, I think this is the most important of the three. I think this is where we’ll see many more schemes take that deliberate and strategic approach. So really setting out those clear plans for how they’ll both generate surplus and utilise surplus over time. We think it’s a really big benefit for schemes that are deliberate in those choices between the three different end games and how they value that impact of flexibility.

As always, the early bird catches the worm. Those who start early, engage with trustees and set that really clear framework for surplus will be best placed to really capture that opportunity. And it’s not easy because you’re trying to create some certainty against a backdrop that itself is fraught with uncertainty. So to Muirinn’s point earlier, the regulatory framework is evolving now as we speak, but having that clarity around both your central strategy, but also revisiting and having that adaptability of when you should pivot and how you pivot, is really beneficial. So we’d encourage people to really get ahead of this rather than waiting for all the puzzle pieces to be fully locked in before they really start engaging and thinking about it in more detail.

[00:13:50]

Sophie:

Absolutely. And we would encourage people to read the “Mind the Surplus” paper, which Adam mentioned. It’s great. And we have also included a link in the podcast so that you can read it more easily.

Now, if I attempt to summarise our conversation today, as with all types of pensions, there’s a lot of change. Lots of things are happening. It’s going to take a little bit longer for these changes to come through, but we’re going to see quite a lot of innovation, especially in the kind of superfund, surplus, run on space. And it is essential to start planning now to make the most of this.

Thank you, Muirinn.

[00:14:24]

Muirinn:

Thanks so much, Sophie.

[00:14:25]

Sophie:

And thank you, Adam.

[00:14:26]

Adam:

Thanks very much.

[00:14:27]

Sophie:

And then thank you very much for listening. Please do subscribe and join us next time.

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For professional clients only.

[00:00:00]

Sophie: Welcome to PensionShip, the podcast series from BlackRock for professional investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market. I'm your host Sophie Dapin, and I'm very happy to be joined again by our regular guest, Muirinn O'Neill, who leads on policy engagement for retirement in the UK for BlackRock.

[00:00:23]

Muirinn: Hello again.

Sophie: We're both delighted to be joined by a new guest to the podcast, Tamryn Rowlands, who works with Local Government Pension Scheme, or the LGPS.

[00:00:33]

Tamryn: Great to be here.

[00:00:34]

Sophie: It's great to have you. So today we are going to be delving into the world of LGPS, and this is a really interesting area partly because they are some of the only open defined benefits pension schemes left in the UK and they're also a really important part of how the government is considering its pensions agenda. So to start, Tamryn, tell us, for those less familiar with the LGPS, what exactly are they and why are they so interesting, especially at the moment?

[00:01:04]

Tamryn: Great, thanks Sophie. My specialist subjects. I bore everyone. It's great to have people interested to listen. Right, so LGPS stands for the Local Government Pension Scheme, and that's about 98 schemes across England, Scotland and Wales, representing or serving seven million members. And these members are public sector workers.

[00:01:24]

Sophie: So there's been a lot about how private sector have all shut down their DB schemes and are all in DC world. But public sector workers here with DB pensions.

[00:01:32]

Tamryn: Exactly, that's right. So open, growing DB pensions within the public sector. And the sector’s assets, to that point, are around £450 billion and that's set to grow to over a trillion by 2040 because it is open and growing. What we've seen characterised in this sector particularly is pooling set by the government. Currently there are eight pools in England and Wales. But it's important to note that Scotland remains independent of pooling, so there's no pooling in Scotland. There's some collaboration, but there's no pooling. Maybe just quickly define some terms in case I say this without thinking, but—

[00:02:11]

Sophie: Yeah, what is the pool?

[00:02:12]

Tamryn: So you have the pools, and then underneath the pools you have the partner funds. These are like the local authorities. So think like Somerset, or a London borough or Manchester.

[00:02:24]

Sophie: So are they the underlying schemes or do they themselves have lots of underlying schemes?

[00:02:27]

Tamryn: That's right. So the underlying scheme is a partner fund, and they have pooled and come together into eight LGPS pools within England and Wales.

[00:02:37]

Sophie: So Muirinn, if we talk about what the market's going to see next—and Tamryn's mentioned that there are already pools—what are the further changes that the government has suggested?

[00:02:47]

Muirinn: I think when we're thinking about this, it's important to think about the journey that we've been on. So, we had the first round of pooling, which was instructed by the government, in 2015. I'm looking at Tamryn for a nod.

[00:02:58]

Tamryn: Yeah, that’s it. I've been in LGPS for so long.

[00:03:01]

Muirinn: So yes, we had the first round of pooling whereby the government said to the partner funds: “You need to come together and form asset pools and bring your assets together onto a pooled platform.”

However, they weren't particularly—they didn't tell the schemes exactly what that needed to look like, what the pools needed to have in terms of governance or structure. And so the eight LGPS pools that currently stand grew up organically. And what that has meant in practice is that they have different governance structures; they are set up in different ways.

[00:03:33]

Sophie: Sorry, do you mean they are different—so the pools are different to each other, but also within the pools, is it different the way that the different partner funds are—

[00:03:40]

Tamryn: That's right. Yeah, exactly. And they've got different numbers of partner funds as well, which features in their structuring.

[00:03:46]

Muirinn: Yeah. And so some of them have been FCA regulated, some of them are not. And yes, they're all structured slightly differently, and they have different relationships with their partner funds as part of the government's broader work on both the growth agenda, but also on looking at the pensions market and thinking whether it's working efficiently. What they have been trying to do is bring a little bit more structure and a bit more uniformity across the LGPS. And so we are going to move from eight pools to six pools and they will be larger.

That's the plan. But they will also have similar governance structures, they will have more control in terms of what the asset allocation looks like across their partner funds and more generally, they will be regulated as asset managers as opposed to the current situation whereby different schemes can get their own investment advice and set their own SAA, or strategic asset allocation. That will now sit with the pools. So, they will have a lot more control and be more of a body which brings together the partner funds and makes investments decisions.

One other thing, it's very important to note, is that the timelines for doing all of this are very quick. So the deadline for pooling is March 2026. At that point, the government wants to see all of the assets sit on pooled platforms. So that means that both the pools that have been told they're not moving ahead will need to consolidate with other pools, but also not all of the assets from partner funds were pooled before this work started. So they might be part of an LGPS pool, but they didn't necessarily have all of their assets sitting on the platform.

[00:05:21]

Sophie: But they have to literally sell their existing assets and asset allocation and move it over to the pool.

[00:05:27]

Tamryn: Yeah, that's totally right.

[00:05:28]

Sophie: So by 2026 in March.

[00:05:31]

Tamryn: By March 2026.

[00:05:32]

Sophie: That's like a very quick timeline, especially for pension schemes.

[00:05:35]

Muirinn: Yes. Very quick. And across the pools, they would have different percentages of assets that currently sit on the pool, the platform. So there is a different amount of work based on which pool you're in. It's pretty punchy and it's a lot going on, and I'm sure it's very stressful for the LGPS as they go through these changes.

[00:05:54]

Sophie: So Tamryn, how are your clients responding to this?

[00:05:57]

Tamryn: I think one thing the LGPS has done—they're really resilient, they've obviously gone through a lot of government change over time, and they've really stepped up here and delivered. I think a lot of them have been extremely busy over the summer.

If you think about the 21 orphaned partner funds, they've had to find a new home. So they're going through due diligence processes with their potential new pools, but also having to ratify those decisions through committee. So I think it's been an extremely busy time for them. You've got the partner funds that are sitting in a pool today where, as you said, Muirinn, they are having to now move assets on or think about how they move assets onto the pool.

The pools have been working with them and putting in place oversight and governance arrangements or they’re having to actually move assets. So I think there's a lot going on there. At the same time, they're also having to deliver their fiduciary obligation to their members. So thinking about their strategic asset location, the SAA that they've set, how are those filtering in? Are they delivering against those? Are they implementing against that? So I think there is a lot going on. There's a lot that they've had to do and had to take on. But I do think they are resilient and are working through it as best they can.

[00:07:06]

Muirinn: And one other thing to note is I think there was some thought when this March 2026 deadline was first proposed, there might be some flexibility around it, but the government have been pretty strident that March 2026 is when they want to see this happening. And I think some of that's to do with the fact that they haven't necessarily viewed the first round of pooling as fully successful, because as I said, it was happening in—

[00:07:30]

Sophie: Unfinished.

[00:07:31]

Muirinn: Yes, pretty much. And so they want to set a pretty strict deadline for March 2026. I think in reality, there probably will be a little bit of flexibility around that deadline. So if you can show government you're in the process of doing so, or you know there are holdups which are preventing you from doing it, but your plan is to get there by—in a few months time. I think that level of flexibility we might see, but I don't think there's going to be wholesale flexibility whereby they're going to say: “Oh, it's fine if you don't do this for a year or two.” I think the reality is they want to see this change happening and they want to see willing from the sector that they are making these changes.

[00:08:09]

Tamryn: Yeah, that's right. And the one thing that we were talking about as well is on top of this, the pools are having to do more. So the pools are being asked to do more as part of the Fit for Future consultation. You think about SAA, the pools are now also having to deliver that as part of this piece of work.

So they are building out teams, building out offerings there for their partner funds.

[00:08:29]

Sophie: What's the focus like on UK investment for LGPS, Tamryn? I know this is something that we've spoken about a lot, particularly as it pertains to DC schemes, but is this a focus area for LGPS?

[00:08:41]

Tamryn:  Absolutely. And they've always—I think the LGPS has always had a focus on UK investments. If you think about the committee structure, you've got a lot of local councils involved. They always focused on what they can do for their local communities that they work in and serve in. And the government have also been focused on how they do that. To give you some numbers, I think there is an estimate of around £120 billion is currently invested. So that's about 28% of strategic asset allocations are allocated to UK assets.

[00:09:10]

Sophie: That's high.

[00:09:11]

Tamryn: Across sort of UK—across England and Wales. So that's pretty high. That is across the board. So that's both public and private. You can see already they do have a pretty big allocation there. When you look—and I think some of the government agendas think about levelling up—there's more of a focus on this on the private market side. And some of the numbers there are—I think there's about £18 billion across UK PE, so private equity and infrastructure currently invested across England and Wales LGPS partner funds. So I think it is a focus area for them. I think the government doesn't want them to do more.

[00:09:47]

Sophie: So Muirinn, on that. How does it compare to DC? We've had a lot of conversations about the backstop and the fact that it might become compulsory for DC schemes to invest in UK. How is it different, the language?

[00:09:58]

Muirinn: I think there is a slightly different view of the LGPS versus DC as in respect to this question. So as Tamryn said, the allocation in the LGPS to the UK is already quite high and there already is that kind of private market investment. Both with the UK tilt, but also more generally within the LGPS and that makes a lot of sense. It's an open DB scheme. They don't have the same sort of commercial cost pressures that we've seen in UK master trusts, which we've discussed before. They don't have the charge cap in the same way, so they've been able to make these investments over the longer term. And you can really feel this in the way that, for example, the minister spoke in the pension schemes bill committee stage.

He said the issue around DC investment is it's a bit of a collective action problem. So nobody wants to move first because they don't want to put their prices up and then in the market they lose out. That's not the same obviously in LGPS. And so the government hasn't felt the need necessarily to get as involved and certainly they have said, for example, there was a power which would allow them to get a little bit more involved in the strategic asset allocation, which they actually removed at committee stage.

[00:11:19]

Sophie: That's interesting. So the opposite view to what's happening in DC complications.

[00:11:23]

Muirinn: Yeah, and I do think they want them to do more. And so one of the things that is part of all of these changes is that the LGPS pools will have to set targets for local investment and then they'll report on those. And that's really to try and invest in that kind of local community. So that was actually one of the points that was consulted on. What does local mean? Does local mean in the UK or does local mean in the area where the pool is?

[00:11:49]

Sophie: But you're not—you wouldn't necessarily expect that to massively increase the amount in UK, it's more reporting on what's already—

[00:11:56]

Muirinn: I think it's an encouragement to go further and to do more very local investment. But to Tamryn's earlier point, this is already happening. And to the point around consolidation, the hope is as these sort of schemes become more consolidated, as they become more centralised, they can make larger allocations, they can be more strategic in those type of investments.

[00:12:18]

Tamryn: And you're starting to hear that already. A lot of the pools have already set up. So if you think about—not necessarily a pool—the GLIL, infrastructure programme, that is a coming together of a couple of LGPSs and it's focusing in on UK infrastructure.

[00:12:34]

Sophie: That's like a platform where they can all invest in UK infrastructure.

[00:12:38]

Tamryn: Exactly. So you have had that, you've had the London Fund from the London CIV, they have been working on that. So I think that there are already areas where there's the scope to do that. I think the government does not want more, as Muirinn said, and what they really—I think the pools are trying to work out now is how do you deliver real local investment when you are going to be a hundred-billion-pound pool? Like it's quite difficult. It might be quite challenging to find local investments at scale to deliver what your partner funds are looking for.

[00:13:07]

Sophie: That's really interesting because I think we often talk about the benefits of scale, but in this particular situation that might make it more of a challenge. So that's really interesting because that's potentially a negative of this kind of large scale, it might make it more difficult for these kind of local investments. But obviously the point of all consolidation is that overall, the pool should see great benefits to scale? Do you see that coming through already?

[00:13:33]

Tamryn: Yeah, I think that's right. I think that's really right. Particularly with the next round of consolidation, you're going to go from eight to six pools, so you'll have even more assets concentrated under fewer umbrellas, and this creates some of the largest pension investment entities in the UK. Some of these entities are going to be over a hundred billion. With that greater scale, the pools become more influential asset owners. I think we've seen a lot of benefits to date already. I think fee compression has been a really big factor.

But I think what you're going to see even more now is the pools being able to negotiate directly with fund managers, and maybe more particularly on the private market side, getting access to, maybe some co investment opportunities with bigger plays in those markets.

[00:14:19]

Sophie: So directly going into things, not having to access things through funds.

[00:14:22]

Tamryn: That's exactly right. And I think that scale gives you the leverage to be able to do that.

[00:14:27]

Sophie: A wider opportunity set.

[00:14:29]

Tamryn: That's exactly right. Yeah, that's exactly right. So I think that is a real benefit there.

[00:14:33]

Sophie: Is this similar to what we see in other countries, Muirinn?

[00:14:37]

Muirinn: Yeah. And so I would say, when we were talking about DC and what the government was trying to achieve, we talked a lot about Australia. I think as it relates to the LGPS, what the government's really thinking about here is Canada.

[00:14:50]

Sophie: That's the gold standard.

[00:14:51]

Muirinn: Yeah. So they're thinking a lot about the Maple Eight and—

[00:14:54]

Sophie: Isn’t that a great name?

[00:14:55]

Muirinn: It's lovely. And what they're able to do and how they're able to invest globally, but also the prestige that comes with having these massive pension funds in Canada.

And I think one of the big frustrations that you hear a lot from politicians is: “Okay, so why do the Australians and the Canadian pension funds own these big pieces of infrastructure in the UK?” So think bridges, tunnels, airports, a lot of these are owned by Canadian and Australian pension funds and I think the government really wants the LGPS to be able to be a player in those types of investments and to own things here in the UK.

[00:15:31]

Sophie: So it fits into the kind of growth agenda.

[00:15:33]

Muirinn: Yeah. As well as that prestige point, investing in things around the world.

[00:16:04]

Sophie: In terms of predictions, where obviously there's pooling, we're seeing more scale, consolidation. What do you think this market's gonna look like in 2030?

[00:16:15]

Tamryn: So I think that there's a feeling or a sense that whatever you’re doing in round two, you need to try and future proof yourself, that the government will likely come again and look at what further consolidation could happen and could come through.

[00:16:59]

Muirinn: The one thing I would say is the government have been very clear. They've said: “We will not go for another stage of pooling. We just—not in this parliament anyway.” They do not have plans to, they've already forced the LGPS to do a lot of work and they're very cognisant of that fact. So as we look to 2030, I think what we see now, the sort of six pools, is likely to be where we are in 2030.

As we think about a longer term, so as we look to 2040, when Tamryn said the assets are going to be around a trillion, I think as we get to 2040, we probably are likely to see a bit more consolidation, whether that's one, two, three, four, who knows? But I think it would be pretty understandable if at that point there's more of a conversation about what the structure looks like and is it working in practice?

[00:17:50]

Sophie: So more to come. The current focus is March 2026.

[00:17:53]

Muirinn: Yes, that's it. That's a lot to get dashed into all of their brains, I'm sure.

[00:17:59]

Sophie: And then from then on we can speculate about what will happen in the future. Thank you so much, both, for joining today. I've really enjoyed our discussion.

[00:18:06]

Muirinn: Thank you.

[00:18:07]

Tamryn: Thank you. Thanks for having me.

[00:18:08]

Sophie: Thank you for tuning in to today's episode. We really hope you enjoyed this discussion and please be sure to subscribe and join us next time.

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

This document is marketing material.

In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its affiliates All other trademarks are those of their respective owners.

MKTGH1025E/S-4943592

For professional clients only.

[00:00:00]

Sophie:

Welcome to PensionShip, the podcast series from BlackRock for professional investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market. I'm your host, Sophie Dapin, and I am very happy to be joined again by our regular guest, Muirinn O'Neill, who leads on policy engagement for retirement in the UK for Blackrock.

[00;00:24]

Muirinn:

Hi Sophie, lovely to be here as always.

[00:00:27]

Sophie: Great to have you back. And we are both delighted to also be joined by a new guest to the podcast. And that's Tim Hodgson, who leads BlackRock's DC business in the UK.

[00:00:37]

Tim: Hello. It's very exciting to be here.

[00:00:39]

Sophie: Welcome. We hope you enjoy it. I'm sure you will. So today, Muirinn, Tim and I are going to be delving into defined contribution (DC) pensions.

It's an important episode for lots of reasons. Firstly, most of our listeners will likely have a DC pension, but also the government have really honed in on DC pensions as a space where they want a lot of change and quickly.

So Muirinn, let's start. Can you tell us what change they have in mind and by when? And I can see that you actually have a timeline in front of you that looks very, very busy. Can you talk us through that?

[00:01:14]

Muirinn: Thanks, Sopie. And yes, I do have a printed timeline in front of me, and—

[00:01:17]

Sophie: You do your preparation.

[00:01:18]

Muirinn: Yeah, I take this very seriously. So I would say that there is a huge amount happening. It's kind of everything, everywhere, all at once for DC schemes over the next sort of five, six years.

We have some of those longer term pieces that we've talked about before. We have the value for money assessments coming in. We also have guided retirement provisions so that schemes will have to provide retirement income solutions for their members. We also have small pot consolidation. And then we have the things that came out of the Pension Investment Review, which we've discussed before.

So we do have the minimum skill requirements coming in by 2030. That's to be at £25 billion for multi-employer schemes.

[00:01:57]

Sophie: So this is where the master trusts have to be at £25 billion, otherwise they won't be able to continue.

[00:02:02]

Muirinn: Yes, the master trusts and the GPPs (group personal pensions). It's being applied at arrangement level. So if a scheme had kind of GPP and a master trust, as long as they were following a sort of same investment solution, they could be fine at £25 billion.

So that's the skill test. And then we also have the work around investment. So we have the backstop power, which is in the bill which I'm sure we'll get into in a little bit—

[00:02:24]

Sophie: This has been in the news. This is a private market—

[00:02:25]

Muirinn: Yes, this one has been the most contentious and the most controversial, and certainly the one that's being discussed the most. The backstop power, which will allow the government to make the voluntary commitments, which a number of schemes have signed up to. The Mansion House Accord, which is a voluntary commitment to make schemes invest about 10% in private markets, with half of that in the UK. The government is taking the power within the bill to mandate that if schemes are not living up to their voluntary commitment.

So that's a lot to happen in the next period. And I think within industry there's been quite a lot of, you know, reaction in terms of the amount of things they're going to have to do in the next period.

[00:03:06]

Sophie: So Tim, how is the DC market responding to this? Muirinn's mentioned there's a few kind of topical things around consolidation, private markets. What are you hearing?

[00:03:15]

Tim: Yeah, well I mean Muirinn talked about the next five years, but it's not like we haven't had lots going on over the last five or 10. Right?

[00:03:23]

Sophie: This is not new..

[00:03:24]

Tim: No. So I think we have seen—let's take consolidation first, right? Consolidation has been happening for a long time. So depending on your source, anything between 75% and 90% * of individual single employer trusts have given up the ghost and have moved into the multi-employer master trust space over that last ten years—

[00:03:44]

Sophie: That’s a big number.

[00:03:45]

Tim: So a big number. We have seen a lot of consolidation of the number of schemes moving into the master trust and GPP space. And so a lot of the reason for that has been the governance requirements over the last few years. Value for money is a very big one for people to focus on over the last—over the next few years—but actually versions of it have been existing over the last ten years or so. So, consolidation is absolutely happening at that scheme level. And I think something like 90% of DC members in the UK are now in some form of master trust arrangement. We've seen consolidation happen at that level. I think it's probably safe to expect consolidation now to happen and to focus on master trusts consolidating.

In other words, given the scale requirements that Muirinn referenced, there are going to be master trusts in play today who exist in the market, who are simply not going to get there. And so over the next five years, I think one of the interesting things will be to see who survives and who doesn't. And so I think that change will definitely happen.

And then I think you mentioned private markets, right?

[00:04:53]

Sophie: I did.

[00:04:54]

Tim: My other favourite subject.

[00:04:55]

Sophie: Consolidation and private markets, all that you hear Tim talking about.

[00:04:58]

Tim: My two favourite subjects. So the use of privates is happening. I mean, I think we're beginning to see that. There's been a lot of talk about it for the last five years, a lot of focus on how to get it done, and how to deploy capital markets within a DC environment.

I think that is exciting. It's a really kind of good next step for the UK DC market to think about private markets as an additional asset class, a different source of risk, different source of return for the portfolio. So, I do expect that to happen. And we know that again, as Muirinn said, there are specific targets, not least Mansion House, but also in the government's bill.

So I think that's a really positive step forward.

[00:05:45]

Sophie: And do we see examples of that in other pension schemes around the world?

[00:05:50]

Tim: Yeah, I mean, everybody's favourite reference point in the UK DC market is to talk about Australia. But the reality is the Australian market allocates on average that kind of superannuation model about ten times the proportion of a portfolio to private markets than we do today in the UK.

[00:06:08]

Sophie: That’s a lot.

[00:06:10]

Tim: And there have been, there have been implications of that, right? The last—if you take, I think it's the last ten years to last year—the average early stage investor benefited from that allocation to the tune of about 1.2 percentage points higher performance every year for 10 years. Now, one point—

[00:06:31]

Sophie:

And that's comparing the Australian retirement system to UK.

[00:06:34]

Tim: Yeah, to the average UK, DC kind of theme over the last ten years.

[00:06:37]

Sophie: And that’s because structurally they have a much higher allocation to private markets.

[00:06:40]

Tim: Yeah. The superannuation model started 20 years earlier than the master trust—earlier than auto enrollment even in the UK. So they've been doing it a lot longer, the pools of assets are a lot higher, the sophistication of those portfolios is much greater. And that 1.2 percentage point return difference every year doesn't sound a huge amount. But actually, over the course of a 30-plus-year career, you could be talking about a third as large a pot again for an Australian member to retire on.

So having access to it is absolutely a positive, I think, for the UK DC member.

[00:07:18]

Sophie: Now, one thing that has been attracting a lot of attention, the press and controversy in the space, is whether or not investment in the UK private market is going to be mandated by the government. Muirinn’s already kind of mentioned these backstop powers.

[00:07:33]

Muirinn:

Yeah, and that is the question. Should the government have the power to be able to tell asset owners how and where they should invest? And I think we remain concerned that any sort of hard regulatory requirements could conflict with a member's best interests. Obviously, as we've discussed, the government is planning to introduce a sort of backstop power, kind of 'comply or explain' power that they don't necessarily say that they want to use, but they will use if people are not meeting the voluntary commitments that they've signed up for.

I think our view on this is that it needs to be really very strictly limited and tightly defined, because otherwise we sort of risk a situation where the long term interests of pension savers is dictated by successive governments. And what I mean by that is currently, as drafted, the power can be used until the next Parliament. We don't know what the next government is going to look like, what their priorities are going to be. So that's quite a big power to hand to them. And that has been a lot of the concern within industry that, you know, this government might be saying that we’re only going to use this very sparingly, we don't want to use it at all.

[00:08:39]

Sophie: But the next government might—

[00:08:40]

Muirinn: The next government might have a slightly different view on things and giving this power away—it's a big power and so you can understand why within industry there's been quite a lot of concern. And at committee stage, we have seen a number of schemes giving evidence, and talking about their kind of concerns around this. And I think it's fair to say that we have seen a little bit of softening from government. When the minister was asked directly about this, one of the things he said was, 'We really only want to use this on a ‘comply or explain’ basis, and we accept that it might not be possible to meet some of these requirements because of market conditions. And so if a trustee says to us, ‘We did not meet our commitments because we couldn't and it wasn't in our members’ financial interests,’ then we would accept that.' That's a slight softening in position from where we've kind of seen when the bill was first introduced.

And so hopefully we will get to a place where everyone can be comfortable with how this power is going to be used, and it can be as tightly defined as possible. But I think we're on a little bit of a journey to make sure that everyone feels comfortable with where we land.

[00:09:45]

Sophie: And how much of this policy is only relevant to master trusts and not to the single trust DC schemes?

[00:09:51]

Muirinn: In terms of the government's policy agenda, it's been very focused at the multi-employer level. So you've heard a lot—

[00:09:58]

Sophie: This is where the majority—

[00:09:59]

Muirinn: Yeah, and I think they've had a view that with the introduction of the value for money regime, we are going to see a lot of single employer trusts come on the market because it is quite a robust framework and will require a lot of data.

And so their view is quite a lot of single employer trusts will actually end up in multi-employer schemes anyway. But aside from that, I think the schemes that are kind of left at the end of all of this, as we look beyond the next five years, the sort of bigger single employer trusts that are left, I think we'll start to see some move to have them meeting some of these requirements of our own private markets. But at the moment, I would say the regulatory focus for single employer schemes is just making sure they're providing value for money and those that aren't providing value for money going into multi-employer.

[00:10:50]

Sophie:

Great. Well, let's turn to the future. We've heard about consolidation, private markets, the backstop value for money, all of this by 2030. That sounds like a lot, but I'd like some predictions from both of you please as to what you think will actually happen in this time. Tim, we’ll start with you.

[00:11:07]

Tim: Fantastic. I'm notoriously bad at predictions. There's probably two or three areas that I'd call out and I think I've, you know, I've touched on them somewhat already.

I think the first one is we are going to see a consolidation—a reduction in the number of master trusts in the space. We'll continue to see consolidation into master trusts, and then we’ll continue to see consolidation between them and to a smaller number, which is exactly what the government wants, you know, smaller number of larger clients with larger pools of capital to build more sophisticated portfolios.

I think that that is definitely happening and will continue to happen. I do think the private markets allocations will come through. I don't think it's 100% clear where we're going to end up. But the government targeting and Mansion House talking about 10%, I'd be surprised if it stopped there, frankly. And I think, you know, when that happens is more of an interesting question to me than whether, and I think that the allocation to privates over the next five years, if the government get what they want, then we are talking about a big wall of money being available for UK private market companies, whether that's infrastructure, private equity, private credit.

So I think the timing of those investments, the style of those investments is going to be something to focus on quite closely. The headlines I think are clear. It's the reality of how it happens. And then the last thing I would predict, and I reference back to Muirinn talking about guided retirement. Actually, that's going to be a really important part of the next five years of DC is—you know, DC is relatively young in the UK, and so lots of people in DC are not at retirement point where if it's their only source of income, that's going to change over the next five and ten years. So the quality of retirement income solutions, how we help people spend money in retirement, not just save it and grow it, is going to be a huge focus and it is genuinely 50% of my life at the moment is talking about, 'How do we solve that better for the individual than we do today?'

[00:13:09]

Sophie: Okay. Muirinn, do you agree with Tim's predictions?

[00:13:12]

Muirinn: Helpfully, as always with pension conversations, I'm with Tim. We're always singing from the same hymn sheet. Yes, I do agree with most of what Tim said. I think just to build on that, as I mentioned at the start, I've got this timeline in front of me that the government published.

[00:13:28]

Sophie: The very busy one.

[00:13:29]

Muirinn: The very busy one that’s got so many things happening at once. And I think the reality is we're probably going to see a little bit more flexibility than this timeline infers, because if you think about the fact that schemes will, for example, having to be carrying out value for money assessments, setting up their guided retirement solutions, thinking about consolidating with other schemes, thinking about consolidating their defaults. It's so many things to do at once. And I think, to my point earlier about the sort of near kind of flexibility that the minister was showing when discussing the bill with the bill committee, I think there's likely to be a bit more flexibility about how some of these things are sequenced and what actually makes sense for schemes than is implied by what was published.

So I think we are likely to see a lot of change. And I do think that's going to happen over the next five, six, seven years. But I do think they'll probably be a little bit more flexibility than what is implied by everything that's been published. I mean, that's just a prediction, but hopefully that makes people feel slightly more comfortable.

[00:14:33]

Sophie: It does. We've discussed a lot today. There is definitely a lot going on in the world of DC across consolidation, private markets, retirement income. And there's a lot of change happening fast. Thank you both so much. I've really enjoyed discussing this with you today.

[00:14:47]

Muirinn: Thanks. Pleasure as always!

[00:14:49]

Sophie: And also thank you for listening and please do join us next time as we will be delving deeper into the world of local government pension schemes.

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

This document is marketing material.

In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000.

Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made

available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its affiliates All other trademarks are those of their respective owners.

MKTGH1025E/S-4869801

For professional clients only.

[00:00:00] 

Sophie: Welcome to PensionShip, the podcast series from Blackrock for professional investors, where we break down what’s shaping the retirement landscape in the UK and explore the forces that are changing investing. I’m your host, Sophie Dapin, and I am delighted to be joined again by Muirinn O’Neill. 

[00:00:19] 

Muirinn: Hello, hello. 

[00:00:20] 

Sophie: Our resident retirement policy expert in the UK. And also, we’re both very excited to be joined by a new guest, Massi Delle Donne.

[00:00:28]

Massi: Great to be here. Thanks very much for inviting me.

[00:00:31] 

Sophie: And Massi leads BlackRock’s institutional client solutions in EMEA. Now today, the three of us are going to be delving into collective defined contribution - or CDC - pensions. In our last episode, Muirinn and I talked about just how many changes are coming to the world of UK pensions. Now, one of these changes is that the government will be finalising regulations that will extend the possibility of CDC to more pension schemes.

And that’s following the successful launch of the first CDC pension scheme in the UK in 2024. So today we’re going to talk about what CDC is, what these changes mean and the impact that we expect this to have on the UK retirement market. So let’s start. Massi, what exactly is CDC?

[00:01:17]

Massi: First of all, thanks for inviting me. It’s great to be here.

[00:01:19] 

Sophie: Pleasure.

[00:01:19]

Massi: CDC, the way to think about it is somewhere between DC and DB. And if you look at the three key areas, firstly on the contribution rate. In a CDC, it’s very DC like. It’s a defined contribution scheme. So both the sponsor and the employee’s contributions are defined and fixed. In terms of retirement though, it’s a bit more DB like where the retirement income is defined. There’s a defined pension. It’s a formulaic pension. That’s maybe a percentage of your salary for every year that you worked at your employer or some form that you know in advance. The key difference, though, from a DB is the CDC is not guaranteed. It’s a target. It’s highly likely you’ll get it, but it’s not guaranteed as you would have in a DB.

The third element is there is one investment pool. So this is quite different to a DC. It isn’t an age-related fund, or target date or lifecycle. There’s a single investment pool, which is the same investment fund for everyone.

[00:02:27] 

Sophie: So the individuals don’t have their own pot, which they individually track.

[00:02:30]

Massi: That’s correct. There’s a general shared investment risk across all the members and the retirees.

[00:02:37] 

Sophie: So overall, it’s sitting somewhere between DB and DC. It provides more certainty to members than DC in terms of a regular income for life. But it’s a target, not a promised income for life.

[00:02:49]

Massi: Correct. The idea is to have something which is a bit more DB, but without all the guarantees that you typically have in the DB scheme.

[00:02:58] 

Sophie: So Muirinn, we’ve had a lot of enthusiasm from the government about CDC. So why so much enthusiasm? And to that point, how does CDC fit in with their wider pensions agenda?

[00:03:10] 

Muirinn: Thanks, Sophie, and welcome, Massi. It’s nice to have another member of our podcast family. 

So yeah, there is a lot of enthusiasm for CDC. And I think when CDC first came to market, there was even more enthusiasm. I think you’ll remember the CDC was being seen as the great solver of all problems that the government was looking at.

So whether that be investing for economic growth, the adequacy challenge, anything around retirement income. CDC was being seen as a silver bullet. I think as we’ve seen the first scheme come to market and the sort of-people get more to grips with the regs, there’s been a little bit of a mellowing of some of that enthusiasm and now it’s more clear who CDC might be appropriate for and who it might not be. But that enthusiasm still continues. And you can see that in the fact that as part of the scales tests, which we discussed in the previous podcast, that we’re going to-

[00:04:06] 

Sophie: And just a reminder, Muirinn, what the scales tests are?

[00:04:08] 

Muirinn: So the scales tests are that by 2030, the government wants to see that all multi-employer schemes reach 25 billion Pounds. There’s a small carve out if you’re on a realistic path to 25 billion Pounds by 2035, but they really want to see a kind of large scale in multi-employer schemes. They have explicitly carved CDC out of that, so the CDC can come to market at a much smaller scale because they are really enthusiastic and believe in it.

[00:04:35] 

Sophie: They want to give it room to grow.

[00:04:36] 

Muirinn: Yes, definitely. And so I’d say there are three main reasons for this. So firstly, there is the ability to invest in productive assets which we see more in CDC than we do in traditional DC. There is the kind of retirement income challenge that they’ve been thinking about a lot. So as Massi said, CDC provides an income in retirement without retirees having to think about it and gives that kind of steady retirement income, which also gives them a level of longevity protection, which is something that the government’s really worried about. And then finally.

[00:05:08] 

Sophie: So just stopping people running out of money.

[00:05:10] 

Muirinn: Yeah. And I think they’re very mindful of the fact that, like, most people just aren’t equipped to think about their own longevity and work out how much they should be drawing down. So this provides a real solution for that without having to go all the way to DB. And then finally, it really helps with the adequacy challenge, given that we see - usually - greater return in a CDC than we have seen in a traditional DC scheme. So all of these together mean that the government is pretty enthusiastic about it. But I would say they’re slightly more realistic about what the market might look like.

[00:05:40] 

Sophie: Great. So this all sounds great in theory. We heard from Massi how it’s very similar to DC in that there’s fixed contributions, but we’re also hearing that you expect to have higher benefits than DC. So Massi, how exactly does this work? So it’s the same cost, but CDC members magically get better outcomes.

[00:06:01] 

Massi: Yes. Thank you.

[00:06:02] 

Sophie: It’s not magic.

[00:06:03] 

Massi: No, I’m afraid not. There’s no magic involved. That would be very exciting if we had that in the scheme. I think the way to think about this is that the benefits arise from that sharing of the investment risk and the longevity risk, and a good way to think about it is if we use a metaphor. In a DC, the way a DC would work is that you have a-you plant a sapling and this tree grows over time. And then in your retirement, you live off the fruit of the tree.

[00:06:32] 

Sophie: And it’s just one tree. It’s your tree.

[00:06:33] 

Massi: And it’s just one tree. It’s your tree. Whatever happens to the tree, that’s your experience. And that’s the risk of the DC. If the tree grows well and large and produces lots of fruit, you have a fantastic retirement. If it doesn’t, then you have a less fantastic retirement. And the other element of it, of course, is that you can outlive your tree. What happens if the tree dies before you do? But if you die before the tree runs out, you can pass on your tree to your estate. So that’s how DC - the traditional DC - would work.

In a CDC, you do also have a sapling, but you don’t own the sapling. You actually join a club, an orchard, where there’s an orchard of the saplings, and you don’t own a particular tree. You have to contribute to the club and to the orchard. But over time, when you retire, the club promises you a certain amount of fruit. Where does the-where is the benefit to the member? It means that you can be-ou can take a little bit more risk. So for example, if there was a super fertiliser that could really double the growth but has a 10% chance of killing the tree, in a DC, you’d be a bit concerned if you just had one sapling, because what happens if you are the 10% - that is your retirement pot? 

In an orchard, you can try it on a couple of trees. If it doesn’t work out, well, it’s not so bad. There’s a range of outcomes you can have, and so you can share that risk across the orchard. The other thing is, in a club, the new members join in all the time. So new saplings are being planted. So some trees don’t grow too well or something happens - there’s a storm in a particular year, you have time to recover because the saplings will catch up and will grow with you. And that is sharing that risk over time. 

So in general, you’re able to take a bit more risk. You’re less concerned about the immediate impact because you can spread anything bad over time. The downside of it, of course, is if the sapling that you had contributed to the club happens to be the one that’s really the fantastic one, you kind of have to share it with everyone. And so you don’t benefit from any windfall of growth.

In retirement, the other thing is you get your defined amount of fruit, and if you are lucky to be one of the long living ones, it doesn’t matter because of people dying early. You can benefit from their tree. On the other hand, if you’re unlucky and die early, you can’t pass on your tree to your estate. It has to stay in the-and that’s the-in a nutshell, that’s how the CDC works. You can see that as the CDC is the orchard, and you are sharing the investment risk across the membership. So everyone is sharing across-is taking the same pool, sharing the risk across that member.

[00:09:09] 

Sophie: So you’re able to take more risk in the investments, which over the long term should generate a higher return. And then as well as taking more risk, you can hold everything for longer because you don’t have to de-risk your portfolio in the same way.

[00:09:20] 

Massi: Correct. Because you’ve got new membership coming in and you can manage that risk over time. So that’s across membership and time. And the third element of that, of course, is that pooling of that longevity risk in retirement, where the people dying younger subsidise people living longer. But you don’t know in advance who that will be.

[00:09:37] 

Sophie: And, Massi, I know you’ve-you do a lot of calculations on this topic. Like roughly, what is the kind of quantum in terms of outcomes, like the better outcomes you can expect?

[00:09:47] 

Massi: The better outcomes we see are in the range of 30-40% better outcomes.

[00:09:51] 

Sophie: In terms of the end amount that you have to retire on. 

[00:09:53] 

Massi: Correct.

[00:09:54] 

Muirinn: I actually didn’t realise it was that high.

[00:09:57] 

Sophie: It is significant.

[00:09:58] 

Massi: It’s really significant. And it’s largely because of what you touched on, Muirinn, which is you can take on risk. You can look at things that have a lot more productive assets typically. If you look at the Dutch, for example, they have 20-30% in there. And the nature of the risk, you can also take is different. You don’t need that liquidity that you would in a normal DC, so you can afford to widen the scope of investments and the kind of returns that you can get.

[00:10:20] 

Sophie: That’s a really significant number that would have a kind of meaningful impact on adequacy.

[00:10:23] 

Massi: The other point to make is that the benefit of-which you touched on as well, Muirinn, which is essentially the scheme does it for you. You don’t have to worry about “What is the pension I can afford?” Someone does that. You just give them that. In some ways, that’s a disadvantage, because you don’t really have much say what comes in. But for most people, they really seem to prefer that benefit of someone doing it for them and giving them something reasonable and sustainable.

[00:10:47] 

Sophie: This is another really big theme, Muirinn, that you’ve mentioned before about reducing the number of decisions that people have to make around their retirement.

[00:10:54] 

Muirinn: Yeah. I think we’ve talked about before how most people just aren’t really equipped for that sort of decision making. There isn’t really the sort of framework for helping people to make those decisions at that moment in time. Obviously, we discussed before, we’re getting targeted support to help with some of that decision making, but there will still always be a gap in terms of what people understand about how long they’re going to live and in terms of make-and in terms of how much they want to think about how long they’re going to live in order to make those big decisions.

[00:11:23] 

Massi: Yeah, that’s such a big risk that I think people completely underestimate. And if you look at the populations, we always look at the expected life when you retire. But actually, realistically, a quarter of 65-year-olds would live beyond 90 today. And that’s a really long retirement if you think about it. There’s the “Are you sure you can manage that pot over that long period of time?”

[00:11:44] 

Sophie: So I mentioned earlier that currently there’s only one CDC scheme live in the UK, and it’s a single-employer trust. But the regulations are coming to introduce multi-employer. What exactly are the timelines for this and what impact do you think this will have on the market?

[00:12:00] 

Muirinn: Yeah. So unfortunately I do not have a wonderful metaphor. I’m going to have to work on my analogy. 

[00:12:06] 

Sophie: No orchard, no orchard. 

[00:12:07] 

Muirinn: No orchard. So we’ll see regulations in the autumn. But they won’t come into force until next year. And I’d say since we started to have this conversation about the regulations and the extension to multi-employer CDC over the last kind of year, there’s been a bit of a vibe shift, for want of a better phrase. I think if we look back, even the year when we were discussing CDC, people would say things like, “I can see how it works for a single employer.”

[00:12:33] 

Sophie: We can still use the metaphor, can’t we? A single-employer CDC is one or-no, one company has one orchard. A multi-employer is lots of companies in the orchard.

[00:12:42] 

Muirinn: Yes, exactly. Great to make that work for what I’m saying. Yeah. So there were a lot of people, I would say, saying “I can see how this works for one employer who might be used to DB going to CDC. That makes a lot of sense, but can’t see the use case as much in multi-employer schemes.” That is starting to fade away. And I think that dubiousness is fading away a little. I think if you go to industry events, there’s a lot more interest. And certainly from a commercial point of view, you can hear a lot more people talking about coming to market with a CDC solution. So I think we are going to see a lot more interest once the regs are-come into force next year.

[00:13:20] 

Sophie: So on that, I would like to get some predictions from both of you. And we can come back in a year or two and we can see who was right. What do you think is in store for this market? How many schemes? Is it going to go mainstream? Is it going to stay niche? What do you expect to see?

[00:13:34] 

Muirinn: Massi, do you want to be mystic Massi?

[00:13:37] 

Massi: Yes, I started off as quite a skeptic of this, and I’m a convert, so I have the enthusiasm of a convert. I think it’s going to go really big, really mainstream. As soon as we show evidence of how much better the outcomes actually are.

[00:13:52] 

Sophie: That 30-40% that you mentioned.

[00:13:54] 

Massi: Yeah, I think so. I think there’s a lot of talk about “The multi-employer will be for certain kinds of, let’s say, unionised workforce.” I think once the benefits are shown, there’s going to be a lot more enthusiasm across multiple different industries. And I don’t think this is just for a paternalistic sponsor or particularly unionised workforce. I think you can see the real benefits for almost everyone. And as people get a little bit more creative in terms of the benefits design and how that would work, and give more options in terms of at retirement, how much you can take out, the kind of retirement income you can get - 

I think it’ll be very positive and there’ll be a lot of support for that. I can actually see this as being a third of the market. Maybe one big-one or two big multi-employers or part of multi-employers really taking a very big proportion of that market.

[00:14:48] 

Sophie: Do you agree, Muirinn? Judging by your face, I’m not sure you agree with a third.

[00:14:54] 

Muirinn: Okay. So I never think of myself as a pessimist, and I’m certainly not in this case. I’m still very enthusiastic about CDC, but I would say it’s probably likely to be more 10, 15% of the market. Maybe that will scale up over time, but I do think the market moves quite slowly, and it does take quite a while for people to get comfortable with things. And I think I would be more comfortable saying the sort of 10, 15% rather than going for the full third.

[00:15:23] 

Massi: It’s nearly 100% in Denmark and they’ve got choices there. 

[00:15:28] 

Muirinn: Very good point.

[00:15:29] 

Sophie: Thank you both so much for your time today. So I’m now going to attempt to briefly summarise our conversation today. CDC pensions are designed to provide overall higher pension pots for life in a way that is easier for the member to understand. It’s early days, but CDC orchards could provide a really important part of the UK pension industry’s ecosystem.

Thank you so much to Muirinn and Massi for joining and thank you for tuning into today’s episode. We really hope you enjoyed this discussion, and please be sure to subscribe and join us next time.

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Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation

may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

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In the UK and Non-European Economic Area (EEA) countries: This is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000.

Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made

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MKTGH0925E/S-4779021

For professional clients only.

[00:00:00]

Sophie: Welcome to PensionShip, the podcast series from BlackRock for professional investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market. I'm your host Sophie Dapin, and I am delighted to be joined by Muirinn O'Neill, who leads on policy engagement in the UK for BlackRock.

Now, over the last couple of months, we have seen a huge amount of change in the world of UK pensions: a whole raft of new government reforms aimed at improving member outcomes alongside driving UK growth. Against this backdrop – and to quote you Muirinn, when we last spoke – there has never been a more exciting time in UK pensions than now.

So on that note, our goal for this episode is to take a look at the big picture, take stock of where we are today and what these reforms might mean for the future of pensions in the UK. So Muirinn, tell us what has happened and why all this excitement?

[00:00:57]

Muirinn: Thanks Sophie, and thanks so much for having me back.

There's nothing I love more than chatting about pensions policy, so I'm very pleased to be here. It is a momentous year in pension policy and there are really two kinds of factors that are driving this. So the first is – I mean, it's something you referenced in your intro – but obviously the Labour Party were elected last year and they promised a lot about economic growth whenever they came to power as a way to improve public services, to improve how much people are earning and basically to improve the lives of people across the UK.

But you also won't fail to notice that we are in a particularly fiscally constrained environment at the moment. So they aren't able to necessarily pull the same type of levers that the previous Labour government pulled or something like the Individual Retirement Account (IRA), which they had in the US, where they did massive levels of public investment.

So in that context, pensions has become a real focus area for the government and there's been a view that if they can help pension schemes to invest more productively in their view they might be able to bring about some of that economic growth. So that's the first factor.

The second factor is more structural. So we have a pensions market which is maturing. And even without the election and Labour coming to power, we probably would've had to think about how this sort of system is working and whether it's effective. We are just over 10 years on from the introduction of auto enrolment. We're about 10 years on from the first round of Local Government Pension Scheme (LGPS) pooling. And also we have a defined benefit (DB) market that looks completely different than it did five years ago in terms of funding level. So in that context, we would’ve had to think about how the system is working anyway. And there are initiatives like the Value for Money framework or guided retirement income or small pot consolidation, which were probably going to happen anyway and have been being worked on for the past few years.

[00:02:53]

Sophie: So of these two drivers – you've got the economic growth driver, and then as you're saying, just like a fundamental change in the pensions market structurally and the fact that it's maturing – is one of these drivers more important than the other?

[00:03:05]

Muirinn: Yes, very much yes. So, you can't fail to notice that growth is the imperative with this government, and I would say that growth is the most important factor here, and you can see that in the different initiatives and how they're being prioritised. So what's happening is that there are a number of initiatives like the scales tests in defined contribution (DC), and all of the work around in UK investment that are very clearly linked to the first, but even things that are linked to the second.

So as I referenced, the Value for Money regime is becoming more closely linked to conversations about economic growth. Similarly, the regulation for superfunds is something that we've been talking about for a number of years, and it's included in the Bill that the government has published.

But even the conversation about superfunds, which used to be about a possible other route for DB funds—

[00:03:57]

Sophie: That definitely used to be a more structural thing. Like, DB funds are maturing, what are the roots for them?

[00:04:02]

Muirinn: Yes, definitely. But now it's, Okay, yes, what are the roots for them? but also, Can superfunds invest in private markets? Can they invest more productively? Is that a possibility under superfunds? That's not possible in traditional DB. That's a conversation that people are having and so you can see how the first factor even on those more structural elements is coming into play.

[00:04:25]

Sophie: That's really interesting. I think it's also really interesting how quickly this has all come about. So the Labour government came into power in July 2024, and then in June 2025, we saw the Bill be published. I'm sure everyone will be very disappointed to hear that we're not gonna go through every single aspect of it in detail for hours. But Muirinn, can you tell us at a very high level, what are the key things in the Bill across DC, LGPS and DB pensions?

[00:04:53]

Muirinn: Yep, and as you say, there is an awful lot in there so I'm not gonna go into absolutely everything that's in the Bill.

[00:04:58]

Sophie: And we can in future podcasts.

[00:05:00]

Muirinn: Yes, and we will go into much more detail, yeah, in specific podcasts, but we're going to try and keep it light here. So yes, in DC, we are seeing both those more economic growth focused initiatives that I mentioned before that are part of the pension investment review. So things like the scales test for DC whereby DC schemes will need to be at 25 billion by 2030 in order to continue as well as the new backstop par, which will allow the government to mandate investment in private markets and in the UK if they do not feel that schemes are meeting their voluntary commitments, which has obviously gotten quite a lot of media attention—

[00:05:39]

Sophie: A lot of media.

[00:05:40]

Muirinn: —and has proven to be relatively controversial. And I'm sure we'll talk about that a little bit more when we get more into the detail. Alongside those more longer term initiatives—so we are also seeing in the Bill the Value for Money framework, as well as guided retirement income solutions, which will put a duty on trustees to provide a suite of retirement income solutions as well as a default. And finally, we're also seeing small pot consolidation. So it's a mix of the economic growth and also those structural initiatives that we talked about before.

In LGPS, we are seeing further pooling, so we will be moving from eight pools to six. We're also seeing new requirements around governance and also, on top of that, we have the new local investment targets, which LGPS pools will need to set and then they'll be expected to meet them.

And it's worth saying that both on LGPS and on DC, these initiatives are moving pretty fast. We will get more regs consulted on to get into some of the detail in the next year or so. Whereas the initiatives that are included in the Bill on DB, I would say are moving slightly more slowly.

So we have things like surplus extraction, which was included in the Bill, as well as a new regime for superfunds. And both of them were expecting consultation in 2027, 2028 before those sorts of things are up and running. So you can see there's a slight difference in how the government's approaching both DC and LGPS where we're moving very quickly and DB where we're moving a little bit more tentatively.

And some of that's to do with impact on the gilt market. But some of that's also to do with the complexity around DB and a feeling that DB is now back in a good position, having been in deficit for so many years and not wanting to do something that, like, ultimately upsets that.

[00:07:24]

Sophie: So is the focus now going to be entirely on implementing the Pension Schemes Bill, prioritising the DC and LGPS changes? Are there any other changes in pensions, which the government are likely to also be prioritising?

[00:07:36]

Muirinn: The Bill will be a major focus for the rest of the year, and we're likely to see quite a lot of debate as we get to committee stage, which will be in the autumn, and certainly around, for example, the backstop power. We're expecting quite a lot of conversation within Parliament and within committee stage.

[00:07:52]

Sophie: So the backstop power is mandation of investment?

[00:07:56]

Muirinn: Yes. Yeah. And I think there will be quite a lot of debate in the Parliament about that. So that will be a major focus. But on top of that, there are a number of other things also happening so—

[00:08:06]

Sophie: That aren't part of the Pension Schemes Bill.

[00:08:07]

Muirinn: That aren't part of the Pension Schemes Bill.

So we have the second phase of the pension review, which is focused on member outcomes, on adequacy, on minimum contribution rate, and also starting to think about the state pension and whether that's fit for purpose. The government has recently launched a Pensions Commission, which is going to look at these issues.

[00:08:25]

Sophie: And so there's been a lot of press around the state pension age.

[00:08:29]

Muirinn: Yes, exactly. The Commission has a lot longer. They are working on an 18-month timeline and they'll report in 2027, and we don't expect some of the changes that they're gonna bring about to come about until the next Parliament.

So that's a much longer timeframe. But that work has just kicked off. So they'll be consulting both formally and inormally for the rest of the year. So that'll be also a focus. Alongside that we have the extension of CDC to multi-employer schemes and that we are expecting regs for in the autumn. So that'll be a massive change for industry.

And then finally, we also have the FCA’s new regime for targeted support, which they have just published a consultation on, but we're expecting final rules toward the end of the year. And what that is in practice is it's a new regime which will allow financial services firms, including pension schemes, to have a completely different relationship with their customers than what they have now.

So in the UK we have pretty rigid rules around financial advice and guidance, and firms have not really been able to take what they know about their customers into account and be able to give them any form of tailored guidance or nudges or advice based on what they know about them. That is about to change, and that is what targeted support is. It will allow firms to give recommendations to their customers on a people like you basis. So they'll be able to put people into customer segments and then give them nudges or suggestions based on those segments. So for example, in decumulation, they might say, Sophie, someone like you, who is

X age, X years old—

[00:10:07]

Sophie: Not trying to guess my age.

[00:10:08]

Muirinn: Not trying to guess your age. And has X amount in their pension pot might think about drawing down at X rate or might give you a warning if you're drawing down too much or might try and guide you towards a solution that makes sense for you.

[00:10:20]

Sophie: And previously they haven't been able to. It’s been on the individual.

[00:10:23]

Muirinn: Yes. Yeah. And that's been a big worry for a lot in industry because they can see that people are coming to retirement and they're taking everything out and they're keeping it in a bank account. And so this will completely transform the kind of relationship that schemes are able to have with their members around accumulation.

So we'll see final rules for that by the end of this year with authorisations opening in March. So from April next year-ish, schemes will probably be able to communicate with our customers in that way. So that's a really big change and that's just one more thing that's happening this year.

[00:10:56]

Sophie: Just one more thing.

[00:10:57]

Muirinn: Just one more thing.

[00:10:58]

Sophie: I'm actually—I'm going to attempt to summarise everything now. So do, correct me. But—so we've spoken about the Pension Schemes Bill and there were changes across DC, DB and LGPS and then on top of that we're expecting change on Collective Defined Contribution and on targeted support. And then also over a slightly longer-term horizon on the Pensions Commission.

[00:11:20]

Muirinn: Yes.

[00:11:21]

Sophie: So just a little bit to do.

[00:11:22]

Muirinn: Just a little bit.

[00:11:23]

Sophie: So we will be unpacking these developments in more detail in future episodes. So if you found today's discussion helpful, please do subscribe and join us next time as we continue to explore the evolving world of pensions.

Thank you again to Muirinn for joining us.

[00:11:40]

Muirinn: Thanks for having me.

[00:11:41]

Sophie: And thank you to you for listening.

Risk Warnings ‌

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

This document is marketing material.

In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its affiliates All other trademarks are those of their respective owners.

MKTGH0825E/S-4726869

Hello and welcome to PensionShip, the podcast series from BlackRock for professional investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market.

I'm Sophie Dapin, your host, and I'm delighted to be joined today by Muirinn O'Neill, who leads on public policy for retirement in the UK. In today's podcast, we are discussing retirement income. So, what happens to your DC pension funds when you retire? Currently, there's a requirement for a default investment strategy when your DC pension pot is accumulating, but then when you actually reach retirement, the requirement for a default goes away.

However, that is about to change with the government introducing a requirement for a default retirement income. Now this is going to have really significant implications in a positive way, but it is going to require a lot of work and change. So, Muirinn, why now? Why is the government focused on making this change now?

Thanks Sophie, and thanks so much for having me. It's very exciting. A bit different from my day job. As you say, it's a really exciting time in retirement income. And I would say that globally a lot of markets, as we move from DB to DC, are kind of thinking about this challenge. Like what is decumulation going to look like, what's the best solution?

All the mature markets are sort of struggling at the moment. So if you think about the US, if you think about Australia, if you think about the UK, they're all thinking about this challenge. And it's interesting that even Australia, which is kind of often thought of as this sort of poster child for pensions policy here in the UK, is still sort of struggling with this problem, albeit from a slightly different angle as their problem is that people have too much money and they're not spending it. Whereas our problem is slightly different than that. But to your point, why now?

I think there's a number of things that are coming together at one time. Obviously we have, as I said, this move from DB to DC and we're going to at some point soon reach that cliff edge where people are coming to retirement with DC pots that aren't just ancillary to their DB pension, but are their entire pension.

And when do you expect that that's really going to come into effect?

Not for another 10,15 years we're talking about, but we need to start to get our houses in order and think about this challenge. So there's obviously that, which is front and center with a lot of policymakers' brains because at the moment, and it is partly to do with the fact that DC pensions are sort of ancillary, but a lot of people take their pensions and because of pension freedom, they take them fully in cash and then they put them in a bank account. About half of people at the minute fully in cash their DC pensions.

And that's a lot.

Yeah, that's a lot. And especially if they're putting it into a bank account, instead of keeping it invested, that's obviously a very suboptimal outcome. So that's something that they really want to deal with. But also I think there was a realization around the time of the guilt crisis that whilst a lot of the focus was on the DB pensions and what happened there, in DC, we had a situation where a lot of people who hadn't made any form of decision about where they wanted to go and were at the very end of an investment strategy ended up losing a lot of money. And I think that was something that really woke the pensions regulator up to this issue and the need for people to be in some form of solution when they reach retirement.

So all of those actors have come together. And the government is thinking about this a lot. There've been a lot of consultations, which we have responded to. And we are expecting next month, for a part of the pension schemes bill to include a duty which will be placed on trustees to provide a suite of retirement income solutions, either themselves or in partnership with another, and then also a default. And the default won't necessarily have to be a default that works for every single one of their members. But you know, it could be done on cohorts, but there needs to be a solution so that if someone makes no decisions at all, they then are defaulted into something. Other than that, the sort of details of what that might look like remain to be seen, and we'll probably see them in secondary regs, but we know that, for example, they're going to want some degree of longevity protection.

Because I think the other big fear here is people don't take advice. People don't know anything. It's a lot to figure out and, you know, to expect people to figure out how they can manage their longevity risk is a lot for a normal person, and so some form of solution that prevents them from running out of money is a big part of this.

So that's the kind of broad brush strokes of what that might look like. We probably won't get the full detail for a little while, but that's what we're sort of hearing from the government. So, by the time the majority of people have DC pension pots, which is 10 to 15 years, there needs to be a solution that works in the market.

And to be honest, this is such a significant change that actually a 10 to 15 year timeframe sounds about right.

Yeah. And I think on top of that, there are a number of other changes just sort of coming together at the same time. So the FCA is also looking at a new regime for targeted support, which gets at the problems around the advice guidance boundary.

So as you'll be aware, at the moment, only 8% of people in the UK take any form of financial advice¹, and many firms, because of how rigid the barrier between the two is, many firms are really worried about getting anywhere near the boundary, so they won't offer any form of guidance for customers. This has been identified as a massive problem in the UK.

So is that when people retire, only 8% get advice? Or is it in their entire lives?

Yeah, that's in general it's only 8%, but you know that the rubber really hits the road when you're thinking about retirement because it's the biggest financial decision people are going to make in their lives.

Absolutely.

Yeah. And so nobody's taking advice and they're just sort of doing it on their own, which again has been fine with a lot of people having some form of DB pot. Not a lot of people are going to wealth managers, that sort of thing. At the moment, it's fine. Looking ahead, it probably won't be fine. And so the FCA has identified that this is a big issue and they're going to introduce a new regime called targeted support. And what targeted support will allow firms to do is to use certain information that they know about you and then set you into a sort of cohort and then give you advice based on that.

So it could be at pension. If you think about your pension pot, it could be the size of the pot, what they know about you demographically, where you live in the country. Based on that, they'll be able to say, Sophie, based on what we know about you, here are a number of options for you. The two things together, the default solution and the suite of solutions.

Plus, this means that the role that firms are about to play in decumulation is about to be completely different because you know, at the moment a lot of firms are really focused on that kind of accumulation phase. This means a big focus is going to have to go towards, for example, the data they hold on you.

You know, is that clean? Is it being held in different places so that they can give you the best solution and try to default you into something that makes sense? So it's really going to be a big change for industry and it's a really exciting thing to happen. And I would say also that I think in Europe, the UK's really moving first on this, which makes sense in a kind of very developed DC market. So I think what the UK does is likely to have ramifications in other markets because they kind of really are at the vanguard here.

So this is, you know, a really exciting time. Like you say, this combination of more of a focus on advice and financial guidance as well as a focus on actually having the right kind of solutions in place should definitely lead to better outcomes. One of the areas I wanted to talk about with you was the idea of inertia.

So the idea that people kind of don't do anything with their pension pots, and actually in some ways that's been quite beneficial with auto enrollment, but as it comes into later life, it can be challenging. Really interested to hear your views here and how that's feeding into this discussion.

Yeah, it's one of the funniest dynamics, I think, with auto enrollment, that it's actually so successful that people basically don't think about their retirement at all. A lot of people don't even seem to realize that they're saving into a pension, whether they're invested or not, and in some ways that's wonderful because it means that auto enrollment is working and it's happening behind the scenes, but in another way it means that people are not thinking about how much they need to be saving, for example, they're not thinking about what their retirement might look like. They're also, I would say, not really alive to the fact that when they look at the people they know that have retired and they think, okay, well my retirement will look like my parents because they don't really know the difference between DB and DC. They're not aware of the fact that a lot of these decisions will rest on them. That it’s not just going to happen for them automatically. And so I think we are facing up to, in 10, 15 years, a moment of real clarity for a lot of people and probably quite a scary moment for quite a lot of people because maybe they haven't been saving enough, maybe they haven't given this enough thought.

So I think it's a great thing that the government is starting to think about this problem. But I would say the sort of other side of the coin, as well as these kinds of retirement income solutions, is thinking about ways to get people to see it a little bit more or to think about their pensions a little bit more. And perhaps that will happen when the dashboards come out, which hopefully should be in years to come. And then building a better whole picture of finances and savings and investment and retirement in one base.

Yeah.

And it would be great to see, you know, as pension dashboards mature, whether that is something that could be linked up with open banking, and you could have a whole look at your financial wellbeing. But there is an onus on government, on industry to try and wake people up a little in terms of their pensions and what that might look like because we are now all responsible for our own retirement incomes. And even in my own social life, I talk to people about their pensions all the time. I'm a delight at dinner parties.

I do too. It's fine.

But people are so unengaged and so unaware of what's going on and perhaps some of that inertia that's been successful in accumulation needs to be taken and applied to decumulation. It can't ever be exactly the same because you will have to make choices of course, but the more that some of this can be done in default, I think it will be better because it's a weird irony that you're completely in autopilot up until the point at which you retire and then you have to make all of the decisions yourself.

I'd like to talk a bit about annuities. So I think in a lot of what we're talking about there is this concern that currently there's too much responsibility on the individual to manage their retirement income. And actually this change to the default will mean that it's more incumbent on the company or the scheme to make sure that people aren't in a position where money runs out too soon and annuities might be a really important part of that.

Yeah. So I think annuities might be a really important part of that. CDC might be a really important part of that. I'm conscious we haven't talked about that yet, but I think some form of longevity risk management is going to be the answer here, and what that exactly looks like. I think we have to be relatively agnostic and I think one of the things that is most important that the government can do is be agnostic in the solutions that people provide. So I think it should be on firms to make that decision, but certainly annuities are definitely going to be a part of that. CDC could be part of that. And also I think what's interesting and exciting is we have to get to a place where perhaps the market as it currently stands isn't fit for purpose in terms of retirement income solutions. Maybe there are changes that need to happen in regulation, but the problem has been up until this point, one of the things that regulators would say, so if you spoke to the FCA, they would say, you know, they're not enough retirement income solutions in market. So we are not going to make certain changes that you want, for example, being able to get income from funds. They said there's no need for us to do that now because there's not the solutions. This starts to sort of tip that balance because there is going to be a big amount of demand and also a lot of innovation happening in the market, and perhaps that will lead to different regulatory changes. Hard to say what they are now, but it's an exciting time to think about the future.

So you spoke about longevity protection and annuities might form a part of that, or CDC. So I think CDC is a really interesting one I'd like to talk a bit more about. Now, CDC stands for collective defined contribution, and it is a type of pension scheme that falls between a traditional defined benefit pension scheme and your defined contribution pension scheme.

A collective defined contribution scheme offers you a target pension for life. So this is really different to defined contribution where you don't get a target or promised pension, but you have a pot of money that you can decide what to do with. Whereas in a defined benefit pension scheme, you get a promised pension for life. CDC sits in the middle giving you that targeted pension. And the way that it achieves that is that it has a level of pooling amongst members of the pension scheme, which is a lot more similar to defined benefit versus defined contribution, which is more individual. And we've been hearing a lot of noises from policymakers and government, and from pension schemes about the potential benefits of CDC, which are expected to give kind of overall better outcomes to members than your typical defined contribution scheme.

I'm really interested to hear your views on how CDC sits in the market and what kind of role it could play.

Yeah, it's really interesting and I think it's worth saying at BlackRock we've been really supportive of the introduction of CDC. We think it's really great to see such innovation in the UK market, and we have really been supportive of the extension, which we're now seeing to multi-employer schemes.

Originally, the regs just allowed single employer schemes. We're expecting draft regulation, which allows multi-employer CDC at some point this year. So we were very excited about that. As well as the potential for decumulation only CDC. We think it's a great solution and it's going to be a great solution for many employers.

We don't necessarily think it's going to be the right thing for everyone. I think when CDC first came out, because it was new and exciting, it was almost being sort of sold as the kind of answer to all of UK government's problems around UK investment, around retirement income. I think there's a more realistic view right now in terms of what CDC is and what it isn't. And I think there are many employers who it's going to be a really great solution for, and we're really supportive of those employers to do so. And I think it's really exciting what we'll see in the next five, 10 years as we see more CDC schemes being launched.

So you mentioned CDC in the form of a multi-employer decumulation only solution, and do you see this to be part of the kind of retirement income toolkit?

Yeah, I definitely think so. And I think that's the way the government is thinking as well, that there needs to be a suite of products that are available, so not just fixed income or annuity type products, but also a sense of longevity pooling and how you can manage that. It's funny, I was actually reading a book about tontines, which tells you a lot about what sort of person I am.

A great person.

Yeah, yeah, yeah. Really exciting.

But what was interesting about that is, , this is not going to be accumulation only. CDC isn't a tontine. But you know, there are kind of bits from our past which are almost, could be the solution for the future, which I always think is kind of funny and interesting, but I think accumulation only CDC has a lot of potential. I would say the government is at the beginning of the journey of figuring out what that might look like. I know they have a new person that's looking at that specifically. I would say we are much farther along in the kind of multi-employer CDC and that sort of whole of life CDC, and I think they're trying to figure out the parameters of what accumulation only CDC looks like at the moment. But certainly in the next hopefully five years, I think that is something that they will have figured out and there will be regs in place and hopefully will be in a place where someone is looking to launch one.

Brilliant. Well, we have covered so much today, but if you can just leave us with one thing, what would that be?

I think it's a really exciting time and I think certainly since the introduction of auto enrollment, well, just over 10 years ago, I don't think there has been as an exciting a time in pensions policy. I don't think there's been as much happening, and I think it's a really exciting time and I'm glad that the government is taking hold of some of these strands and thinking about the future.

One thing I would say is something I mentioned earlier about as we move forward, how can the government start to think about people's financial lives in a more holistic fashion and help them to do so. So what I was mentioning about pensions dashboards and open banking, whether you can bring some of that stuff together because we know, like anecdotally and ourselves, that you don't think about your money in different silos, the way that policy is kind of set.

But actually you think about it as kind of your bank account, your investments, your pension, you'll think about them altogether. And so the more in the future we can make that easier for people to do, I think we'll be really great. But certainly we're taking the right first steps and it's a really, really exciting time.

Amazing. Well, thank you so much for your time today, Muirinn. I've really enjoyed our conversation and thank you very much to everyone for listening. Thank you.

¹ FCA 16^th October 2024 A new approach to financial advice regulation | FCA

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

This document is marketing material.

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its affiliates All other trademarks are those of their respective owners.

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Sophie: Hello and welcome to PensionShip the podcast series from BlackRock for Professional Investors, where we share expert insights and opinions on some of the key trends that are shaping the UK retirement market. I'm Sophie Dapin, your host, and I am delighted to be joined today by Gavin Lewis, head of the UK Institutional Client Business. Now in today's podcast we are discussing the Blackrock Read on Retirement Survey. It's based on a survey of 1000 UK defined contribution savers and it unfortunately paints a very difficult picture for retirement in the UK. We'll talk about why this is today. But first Gavin, could you please tell us more about why BlackRock has done this research?

Gavin: Hi Sophie. So yeah of course. So this is actually isn't the first time we've undertaken this this research. The last time we did it was probably about 4 or 5 years ago. And we do this because I think it's important to really understand, how people feel about retirement. I think in our industry, we kind of navigate towards data and information, and what is often missing is the voice of the actual client or in this case, the end member. So I think it's really important to factor those things into how we as an industry are thinking about the pensions industry, obviously, retirement and in this instance, and but also a lot has changed in that 4 to 5 year period. I mean, you know, think about it. The world is a very, very different place. So it's important to get an update, on those changes and how different, you know, generations and demographics feel. And on that point, we also have, new entrants into the pensions, market, which I don't think that when we did this research before, we would have factored their views in. So I think it's really important that, we capture how they think and feel, because I suspect that it will be very, very different from the way that we thought, you know, a certain generation would have felt, previously. So, yeah, it's critically important. And we feel that we need to find some way of connecting with different outcomes for, this, surveyed group.

Sophie: Thanks. Now, one of the areas that you mentioned about different generations, and this is actually one of the key areas in the report looking at the differences between different generations. I think I'd expected to see some difference, but I hadn't fully appreciated the extent. For example, I was surprised to see that Gen Z’s top priority was to just not have to engage with their pension at all, whereas other generations prioritize maximizing returns, which I kind of expected. Why do you think we see such differences between the generations?

Gavin: Yeah. So I think part of it is just the fact that they are in different places in their lives. So and often actually we always lump in Gen Z, and millennials into the same category. And actually you can see differences in the way that they feel about retirement. But there are some commonalities. So in those younger cohorts, I'm not sure it's their unwillingness to engage with pensions. But I think just in terms of priority, it just isn't as important as, let's say, you know, paying down student debt. If they have any or paying their monthly rent or saving for a deposit for their, for their mortgage. And of course, we've got the macroeconomic backdrop which makes this all the more pertinent. So for that generation, you know, they're certainly feeling the impact of the cost of living crisis. So it isn't that it isn't important. It's just that and in their priorities, perhaps it isn't the number one element. I think that's very different to for example, Gen X often called the lost generation because they kind of fell through the cracks of the closure of DB pension schemes and the realization of how much you needed to contribute to a DC pension scheme. And actually for them, it is, a much higher priority. But interestingly, even then, the focus for them is actually, Yes, you're right, Maximizing returns because for them, they realize that they may only have ten, 15, 20 years left to work. And perhaps if they haven't accumulated a lot, suddenly the specter of retirement isn't that far away. And the consideration for them is, okay, so how do I actually ensure that I will be and, can maintain a decent standard of living in retirement?

Sophie: So the survey shows that only one quarter of participants say that they feel on track for retirement. You know this is a very low number. Why do you think it's such a low number?

Gavin: Yeah. So it's interesting when you read the, survey results, about this, this feels like it's a common thread throughout all the generations, probably with the exception of pre retirees. So it's certainly worthy of greater, exploration. One of the issues, I think, however, is that we don't actually have an assessment or benchmark for what a good retirement outcome is for an individual. So, we put a lot of focus on, you know, investment returns and the makeup of a default fund. But the question is for an individual, what does that actually mean? I think a lot of it is more to do with the fact that people don't feel that they're, investing enough. And that's probably more to do with the contribution rate or how much they're putting aside or even are they looking at their statements? Do they understand how much is actually in their different pension pots because most people have more than one. So, it’s difficult to really assess whether people actually are or not as, as an individual.

Sophie: So people feel like they're not on track because it's difficult to measure being on track and therefore they don't know whether they are or not?

Gavin: Correct though, saying that what is clear is that actually we're not saving enough. Right. So the question really here is what is the quantum. What is the difference? So how are we, how far away from having different generations able to, retire comfortably? So, that is what I think we need to explore in greater detail.

Sophie: And are there things that the industry is doing to help people be able to measure what an on track looks like?

Gavin: Well, it's you know, the issue is that, when you think about an individual's retirement, it's going to be very, very personal because whether or not they have paid for a, mortgage or to pay their mortgage and to have a house or whether they have dependents or caring responsibilities, and then how much they actually have to contribute to their own retirement or a spouse in retirement. Those things are very, very personal. But I think what we've tried to do there is think about actually, how much should you be contributing. And what we do know, and what we can glean is that people not contributing enough. So that's the benchmark that we're using.

Sophie: All the things that we can learn from other countries about how to kind of encourage this good savings behavior?

Gavin: Well, it's an interesting point because obviously this, participant and survey is for our for UK investors. And I think there's a wider issue that this uncovers, in that, that we don't have, a culture of saving, and we don't have a culture of, of investing. So you can go to other countries, for example, if you go to the US, you know, everyone knows what their 401K plan is. And can probably tell you what it's invested in and with whom. Over here. You know, if you ask the average person who your pension provider is and how much is in your fund, they probably don't know. And there was some other interesting statistics around just how much the UK population has just sitting in cash, in savings accounts as opposed to actually being invested. Again, if you go to other jurisdictions. Again, I'm using the US is probably the biggest sample size. A lot of them will have their own personal investing accounts. It's normal. It's talked about and we just don't have that that culture here. So, it is something that I do think we need to change.

Sophie: So one of the areas in the report that I thought was really interesting was about how to encourage people to have, you know, emergency savings or sidecar savings. Could you tell us a bit more about this?

Gavin: Absolutely. So this is part of a broader question about what can be done to alleviate this. Savings challenge that we have. And interestingly, as an industry, again, I think we've tended to focus on like the investment outcome, or investment returns or the shape of a default fund, it’s a slightly different conversation, because here we're talking about, contributions and how to impact money going into pensions or into savings.

Now, the probably the first thing that one can do or one should do if you're in a workplace, offers a defined contribution pension scheme as an employee employer contribution that is flexible, it's to max out the ability to do that. So we don't, necessarily control that, but it's up to the individual to think about that. Now, one way to do it is to educate. And I think workplaces can do this via H.R. and benefits teams. But another interesting outcome of the survey data is that we also floated the idea of sidecar or liquid emergency savings initiatives, and this is off the back of, something that we piloted with, Nest Insights. And so, nest is a National Employment Savings Trust, and this was an emergency sidecar savings program where people would actually have access to a liquid savings account. And the concept and idea really, really appealed to many of the survey participants, but in particular Gen Z and millennials.

Sophie: So alongside your workplace pensions

Gavin: exactly.

Sophie: you also have your sidecar and that money is more immediately available to you.

Gavin: Exactly.

Sophie: Really interesting. If we kind of turn our attention towards those who are about to retire, we see from the survey that 76% of people who are about to retire say that they don't have a plan. Could you talk a bit more about why this is, and some of the ways that our whole industry is coming together to try and kind of solve for this?

Gavin: Of course. So, it's interesting because I think the industry as a whole has been so focused on accumulation. That we haven't paid enough attention to decumulation. I think that’s partly because when we think about who's going to be impacted most by the needs to actually spend in retirement, we think about generation X. But what's crept up on us is, you know, pre-retirees and older generation X, and even the baby boomer generation who are now on the cusp or, or at retirement. And what we realize is that we haven't innovated enough around deaccumulation or spending either. What the survey results did throw up is that the vast majority want some type of guaranteed income. They want the assurance and the stability to know that they've got income and it's going to last into their retirement. One thing which is really, really clear and even in more, I would say advanced defined contribution pension systems, if you take Australia, look even with them being ten years ahead of us, what we found is that people are still outliving their savings. So the people here also want something similar, which is I know how much I have, how much I'm going to spend and when to spend it.

Sophie: OK, so people are naturally cautious?

Gavin: Yes. Because look, they've you know, spent their whole lives accumulating, this pot of money they used to a regular paycheck, suddenly that paycheck is no longer there. And what they want is something similar. They want to know that at the end of each month, they know what they're going to spend. They know what's coming in, and they don't want to outlive their savings.

Sophie: And it's a big shift in the UK, isn't it? Because people traditionally have had that with defined benefit pensions and we’re now only just seeing this generation of retirees coming up and receiving the DC pension.

Gavin: That’s exactly it. Exactly it. The other challenge I think that we have is, how do you actually industrialize whatever solutions that we have. So there are varied the range of different mechanisms that people can actually utilize to actually spend. So as an industry, I think we have to think about, what is the most scalable by way of resolving this, this challenge. And it's something admittedly, that we are still as an industry wrestling with.

Sophie: So there’s a lot of data, a lot of numbers, a lot of statistics in the report. But if you could just take one thing away from the report Gavin, what would that be? Apart from telling everyone that they need to make sure that they maximize their pensions contributions.

Gavin: So, yeah, I think I'm going to be cheeky and give you two things. Look you know…

Sophie: Ok, that’s allowed…

Gavin: … it's not too much to say that we have, a retirement crisis on our hands. And I think when you read the report, which we encourage everyone to do, that's very, very prevalent. But I also think we need some perspective because, when we conducted this survey, even just five years ago, even getting people to engage with their pensions was a big challenge. You know, that's a huge hurdle that we've overcome, like all generations realize the importance and utility of a comfortable, stable retirement or retirement income. So that's a win. So I’d say how do we actually utilize this awareness, to drive the right solutions?

Sophie: Fantastic. Thank you, Gavin, and thanks everyone for listening. If you haven't already, I would recommend reading the report. Just search BlackRock Read on retirement or if you're listening from the Blackrock web page click below. We hope you join us again on another episode of PensionShip and don't forget to subscribe! Thank you.

Source: All data from Read on Retirement, Blackrock

Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.

Important Information

This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.

This document is marketing material.

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2025 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, and iSHARES are trademarks of BlackRock, Inc. or its affiliates All other trademarks are those of their respective owners.

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