Doubt is not a pleasant condition , but certainty is absurd


The quote’s from the French philosopher Voltaire and was sent me by my friend Derek Benstead . Derek’s been ill all year, never stops thinking about how to make my and his client’s lives better!

We were discussing people’s options at retirement as I’ve been asked to discuss this on Paul Lewis’ MoneyBox today (Radio 4- 12pm).

People have worked out that if the cost of certainty for their retirement is the feeble return they get from an annuity, they would rather live in doubt and draw their savings as they please.

But as Katie Evans, the author of the Social Market Foundation’s “Golden Years” report will tell us, the experience of Australians and Americans who have tried this has been dubious!

Another friend, David Pitt Watson told me the story of the wise men of Chelm, who have to deal with road accidents caused by a hole in the tarmac.  The solution? -Build a hospital close by.

He was pointing to the SMF’s suggestion the Government   build an early warning system and intervene when dubious decisions become too common!


DWP research arrives just in time!

With serendipitous timing, another eminent research body yesterday released the results of its study on the merits of DC drawdown and CDC as a means to spend retirement pots. The work was funded by the DWP and can be found here. I have found very little in the study that I disagree with. Here are its conclusions

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To paraphrase, if done properly, CDC would produce between more than 40% income and even if done badly it would match the best income levels of drawdown with less likelihood of money running out. While people using CDC would still suffer the uncomfortable condition of doubt, they would not pay the ridiculous price of certainty!

Or maybe a little late…

It is then a great shame, that this means to mend the road has been kicked into the short grass by the Pension Minister’s decision to cut funding for further regulations to allow CDC to work.  The road has undoubtedly got holes in the Tarmac.

To quote directly from a mail sent me by a notable economist

… if I had a one sentence criticism of where we have got to, it would be this. “It is now no longer possible to buy an effective retirement pension with your pension savings”. It is possible to save, (with NEST, NOWand others). But if you want a pension, that is an income-for-life, which won’t run out if you live for a long time, you will look in vain.

We have forgotten that pensions are an insurance product. Instead, we have drawdown products of ever greater dodginess, which are attractive to suppliers in the early years, (when there is a lot of money about), but offer no protection for longevity.

Put simply, for the first time in seventy years, we now no longer have a private pension system.  And meantime we have allowed the banning of the very product (CDC) which, properly regulated, all experts recognise is the structure most likely to resolve the problem. In whose interest could such a decision have been made…

So I am going to BBC broadcasting house to meet Paul Lewis and Katie Evans to talk about this and no doubt much more. I have had some conversations with Paul and we have found some common ground. It is quite surprising that he is more knowledgeable on almost everything I know about than almost anyone I know.

Bearing in mind the breadth of his interests, I think him a renaissance man. I am rather in awe! So wish me and Katie luck – thanks to all who have already!

I will remember Voltaire and not be so ridiculous as to be certain on anything. Nevertheless, I don’t think we need to be as reactive as the Wise Men of Chelm!


If you want to hear more about the Wise Men – listen to me and Katie Evans on Paul Lewis’ Moneybox  at 18 minutes 25 seconds via this link


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Doubt is not a pleasant condition , but certainty is absurd

  1. Martin Evans says:

    Look forward to hearing the broadcast

  2. Mike Otsuka says:

    “…even if done badly it would match the best income levels of drawdown with less likelihood of money running out.”

    A non-pre-funded CDC is not necessarily an example of its being done badly. Rather, what this shows is that, even when started from scratch, without an initial cash injection (and tell me where I can get one get one of those, please!) or the rolling over of existing DB or DC funds into it, CDC would be still be better than the best individual DC option of ‘aggressive drawdown’ since the two have a comparable return (in terms of median replacement salary), but the latter is a good deal more risky, as one’s pot might run out before one dies. Moreover, they say that a CDC started from scratch would become fully funded (which you call ‘done properly’) in eight years.

  3. henry tapper says:

    Couldn’t have put it better myself!

  4. henry tapper says:

    If you want to hear more about the Wise Men – listen to me and Katie Evans on Paul Lewis’ Moneybox at 18 minutes 25 seconds via this link

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