Something “DC” that John Ralfe and I agree on!


I sometimes think John and I will never agree, I am forever looking at the world half full and he “half empty”, where I see opportunity, he sees danger, where he sees certainty, I see parsimony.

But when John posted this article on twitter, I saw an opportunity to agree with him.

A subscription system that allows you to buy attractively priced annuities, years ahead of drawing them for an amount many people could save a month?

Purchasing into future certainty using insurance companies?

Solving the hardest, nastiest problem in finance in an affordable way?

These sound like real solutions to real problems and reading to the end of the article, I get to this.

In a world where employer pensions don’t exist, you need something that does the same thing,” . Otherwise, retirement is going to become a luxury good.”

John is not alone!colin f

Colin Freeman – pictured (he doesn’t like publicity), is one of my favourite people – and yes he’s an actuary with First Actuarial.

Like John, he has little truck with CDC, he wants people to have the certainty of an insurance company backed annuity in retirement and is quite happy to talk to people about the real cost of buying one.

I respect Colin’s view, as I respect John’s. If you want certainty, then purchasing it like this , is a very good way of doing it. It isn’t cheap, but it does just what it says on the packet – come wind, rain – or (today) snow!

All in the pricing.

The proposition being put forward in America by “Blueprint Income” is pitching for money that would otherwise be invested in mutual funds (our unit trusts).

The American 401K lobby is right up there with the NRA – in the hold it has on the State legislature and I don’t suspect that the Blueprint Income people will get much help from anyone in the Trump regime.

But if they can find a way to attractively price their product, I see an opportunity, for at heart we want insurance against living too long and the certainty of income that Blueprint is offering.

Infact, Blueprint are suggesting something that was a central option arising from the Government’s Defined Ambition consultation in 2014, technically it’s called a “deferred annuity”.

I wonder if it would work over here?


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 Something “DC” that John Ralfe and I agree on!

  1. Con Keating says:

    The deferred annuity problem has always been a simple one – cost. I would like ideally to buy with my contribution a retirement income set at the time of making that contribution but the risks which that contract contains simple makes that prohibitatively expensive. The CDC income target is an attempt at finessing that expense.

  2. Richard Bryan says:

    How about a deferred annuity paying out from age 85 (say), and planning a DC pension to last 20 years? I.e., insurance against longevity, but not against expected lifespan? Any idea on the cost?

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