Whose risk is it anyway?


No matter how we look at it – we do not- and will not- live in a command economy.

That means we have to take decisions for ourselves rather than be told how to live our lives.

If you want to be told what to do, you might consider moving to North Korea, they are not currently taking transfers in, though (like NEST) , it looks like that might change.

But we do live in a country where we have a welfare state, a strong health service and a political consensus around how we organise ourselves Pension Wise.

The assumption is that we want choice. Choice comes in two colours – “meaningless and meaningful”. If you are offered the wine-list by the waiter which contains a range offine clarets and plonks- and nothing in the middle- you get meaningless choice – if you are looking for a mid range Sauvignon.

I’ve been arguing for years that the choice between annuity and drawdown is meaningless, it is the choice facing Mr Hobson. We now have the further choice of taking all your money at once,  (the muppet’s choice). We have extended meaningless choice.

If you’ve watched this video, watch it again. If you haven’t – press play!


That is as close as we are going to get to making our pension freedoms meaningful. But the video makes it clear that if you want guaranteed income from the garden shed, you are going to pay for those guarantees (in later life income); and if you want a higher income from draw down, you’re going to pay for it (in later life security).

If you want all your apples delivered to your doorstep today, you may have to give over 40% to the taxman and risk your apples rotting before you can eat them.  You cannot- it seems – have your apples and eat them.

The grey pound is going to be a big issue going forward. As the apples fall off the DC trees, we need a way to make sure we have our apple a day – everyday. Currently the ways of organising income from the retirement savings we build up are too expensive, too labour intensive and too risky.

The obvious solution is to take all our apples to a co-operative distribution centre where apple distribution can be put on an industrial scale. It would still work on an apples in, apples out basis but the co-operative has the means to make sure that apples are shared fairly and stored to minimise waste.

horse apple

I am of course talking about pension collectives where our savings are stored and distributed by experts and returned to us in a sensible way.

The rules for such schemes are likely to take a long-time to be developed. The current estimate is it could take three years. So you’re getting the sizzle not the sausage right now.

Many people would like to see the process speeded up, and with political will = and a few more lawyers, it could be. Many people would like this kind of pension co-operative (mutual) never sees the light of day. They argue that the project is a waste of time.

I am in the former group and look forward to sitting down with the DWP and renewing our discussions on how we can get meaningful choice into the pension system. In the meantime, I’m glad that Ros Altmann is looking at the insane costs that can be incurred in drawdown (see blogs passim) and ensuring that those who have bought annuities in the past, have a way to reverse that decision.

The problem with Freedom and Choice is that freedom is illusory where choice is meaningless. We need a choice for those people who can’t afford fine claret and don’t want a steady diet of plonk! We want apples on our table every day, we don’t want to give them to the taxman or run out of apples!

rotten apples

In short we want better choice – we want something in the middle – we want a default decumulation option.

Whose risk is it anyway?

Not mine- not yours – we need risk sharing.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to Whose risk is it anyway?

  1. Carol Forfar says:

    I couldn’t agree more with your message and glad I’m not the only one thinking that this not only needs to be said but something done very soon. This unfairness must be addressed and protection through some form of cooperative scheme available as a real choice. Thanks for voicing our concerns.

  2. Duncan Singer says:

    Collective DC is of course a must, in some shape or form. My fears are however that the controls needed to make them effective will be incredibly difficult to put in place in a way which doesn’t feel like over compromising freedoms. If the income streams look anything like the black magic that the Industry has conjured up in the past, then they could cause considerable reputational damage, no matter how well meaning those that preside over those controls are.

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