Why I’m so noisy now – about CDC

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At the end of an excellent day discussing how the financial services industry adapts to the changing way we think about retirement, I asked a question of a panel of experts

“Does the decision of 140,000 postal workers to manage their pensions collectively spell the start of something new, or is it just a blip?”

This is not an article about the rights or wrongs of one version of DC over another, but an article that asks why my question was greeted with a stonewall of disengagement.

Q.Who speaks for the “non-affluent”?

We don’t have a word for the people who don’t engage with financial advisors and who are currently off the radar of mainstream financial services. The vast majority of the 10.5m new pension savers are not engaging with anyone but NOW, NEST , Smart and Peoples Pension.

These people are unlikely ever to be considered wealthy and for whom the wealth management solutions talked of at the conference will be quite unsuitable. I think of the people I have met in South Wales who have had wealth management thrust upon them. They have swapped a wage for life for the uncertainty of the markets and – to use a phrase from a steel man, they will have to live with that burden for the rest of their life.

Terry Pullinger, who negotiated on behalf of the Royal Mail postal workers, talks of the proposed CDC scheme as “freedom from pension freedoms”. Most of his members I have spoken to, talk of the relief of not having to bother with managing their pension in later life.

The “non affluent” in our society represent the majority of our society and they are – to use Bernard Levin’s phrase “the silent majority”. When I asked the question that I did, I was speaking to affluent people on behalf of the silent majority and what I got as an answer to my question shocked me.

A. Not many in mainstream financial services.

I take “mainstream financial services to be defined as the insurers, fund managers , consultants and IFAs who read the pensions trade press and attend conferences such as the Horizon #Life19 event, I partially chaired last week.

The panel to whom I put this question seemed to consider it a joke and the best I got as a response was that that the CDC scheme proposed by Royal Mail was a “blip”.

This is very disrespectful of the work of Royal Mail, the unions , the DWP , several consultants but most of all – of the views of 140,000 working people who were singularly unrepresented at the conference – let alone on the panel.

Selective engagement

As usual, at events like Horizon’s #Life19 , there was much talk of engaging with what people want, rather than telling them what they’d get. However, this talk assumed that what the financial services industry hears is what it wants to hear. The voices of 140,000 postal workers – rejecting conventional DC and the wealth management solutions that manage its decumulation – are likely to remain silent

I fear that the listening that has gone on to Terry Pullinger , Jon Millard (of Royal Mail) and to the postal workers, has been confined to Government. The Work and Pensions Select Committee genuinely listened, as (I am told) did the Prime Minister’s Office. The DWP were converted to CDC and its Pension Minister has lately promoted CDC legislation to one of four core items in his pensions bill,

But it would be very easy for a new prime minister, a new pensions minister and a new political agenda, to dispense with the yet to be published pensions bill and dispense with CDC.

If this were to happen, then there would not be so much as a blip and the serene progress of the mass affluent towards their wealth management solution would continue untroubled by any kind of collectivism.

Why I am so noisy.

Several people asked me – after I’d asked that awkward question, why I championed CDC as I do.

The answer is in this blog, it is because no one else (at least at that conference) was thinking about the needs of the postal workers – or for that matter the British Steel Workers who are now faced with the burden of unwanted wealth and incomprehensible wealth management.

CDC is a way of getting a pension – a wage for life – an AgeWage – without having to grapple with the nastiest hardest problem in finance (Bill Sharpe).

It is wrong for us to impose the burden of making the silent majority amateur actuaries, amateur CIOs and the takers of risks they cannot properly manage on their own.

Collectivism is a way of helping ordinary people deal with risks they cannot manage on their own, it is at the heart of insurance, of mutual structures such as building societies and savings clubs and it’s the way that the non-affluent have always been able to get by.

If the collective scheme proposed by Royal Mail is threatened by regime change, that will not be mourned by the people at Horizon’s #Life19 conference, but it will be by the 140,000 postal workers who have expectations of more than the DC scheme they had previously been offered.

If the Royal Mail’s CDC scheme is taken from them, I – and many like me – will not let CDC die.

My hope is that there is sufficient momentum in the development of the CDC legislation for it not to be shelved ( a second time), but I cannot deny that there is a very real risk that it will be pulled on the basis of it “not being our idea”.


Which is why I’m so noisy about CDC.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Why I’m so noisy now – about CDC

  1. Bob Compton says:

    Keep up the noise Henry!

  2. Yes, not a blip, a slow burn to common sense! Unfortunately there are those in the industry that think CDC is too late – yes it should have come in when Pickering was pondering or soon after. Off balance sheet and no marking to market – sensible long term investment.

  3. I Price says:

    I retired 3 years ago and have battled with pension transfers, how to invest income drawdown funds, how much to take out annually etc. In the much vaunted phrase “pension freedoms” there is a subtext (which should be the headline text) that you are now free to run out of money, free to be over-charged, free to be conned out of a final salary scheme pension etc. Is it just me or does the word “freedom” now have a distinctly Orwellian ring to it? Of course the finance industry love these “freedoms” with all the gloriously mouth watering exit, initial and annual charges applied to capital values; whether or not the capital values rise or fall they still get their %s. I am still considering buying an annuity as the answer to the most difficult question of all – how to make your money last the rest of your uncertain life – and would welcome the CDC route as another option, assuming an existing retiree could buy into it….. How to be free from pension freedoms indeed!

    • Philip Persson says:

      Henry, what about promoting CDC by calling it a “shared risk” pension? Would it help move the discussion on from the DB-all-employer-risk vs DC-all-employee-risk dichotomy?
      It really feels like the pensions “industry” hasn’t woken up to the needs of the 94% yet. .

  4. Terence P. O'Halloran says:

    What took 200 years to create as a world leading facility was effectively destroyed, financial genocide, by unit linking and the undermining of insurance companies in the 1980s and 90s. I recently reflected upon Brian Jelly’s Transparent with profit fund when he was actuary at Skandia. Unfortunately, few, but me, saw through it.

    You are correct Henry in that the ‘great and the good’ fail to consult with or listen to “the voices of 140,000 postal workers”. The guarantees of yesteryear are all but disappeared and the responsibility (without the ability) of fund management has been devolved, with the attendant risks, to the individual saver. My voice then, and possibly your voice now, will be lost in the clamour of regulators and actuarial pomp and self-interest to defend the indefensible.

    Unfortunately it is too late to do anything but start afresh and revert to good old fashioned , but eminently successful if left to perform, life assurance and pension fund methodology that stuck with their investments and accepted the responsibility of guarantees without the handcuffs of spurious transparency that actuaries like Brian Jelly so espoused. Most people do not know how their fridge works but live in the confidence that their food is kept cold. (You can work the analogy out I am sure).

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