Ensuring fair pensions for us all?

“It is time to turn the dial back from financial individualism towards an approach that gives the young better hope of a decent retirement”.

My heart missed a beat and my Fitbit tells me it is pumping at a greatly enhanced rate as I re-read Jo Cumbo’s introduction to her session this pm exploring how pensions can give a new deal for the young.

If you can spare an hour out of your afternoon and aren’t suffering Zoom fatigue from LCP’s morning sessions, here is the link.

The FT are taking this very seriously, the session makes its front page.

I hope that Jo and Co will kick-start some enthusiasm for a new approach to pension provision which can be accommodated  by our largest workplace pensions.

I was going to say – “followed by”. But looking at today’s pension landscape, I realize that consolidation of schemes has already gone so far that it only needs CDC to be adopted by a handful of multi-employer DC plans and the odd large employer sponsored plan for it to become the primary way to deliver pensions by default to those who have no guarantees but the contractual promise on contributions.

I was sorry , reading the agenda for LCP’s morning conference that CDC did not get a session to itself but I hope that Dan Mikulskis will consider it in his breakout session on “pathways to where?” . Jonathan Camfield has the opportunity to explain that helping people make good retirement choices doesn’t have to involve complex choice architecture but can simply be a matter of offering a market linked wage for life. If Georgina Smith doesn’t mention the opportunities the Pension Schemes Act leave open for master trusts to incorporate CDC, I will be surprised and disappointed.

Ensuring fair pensions for us all?

There is of course a risk that in offering fair pensions to my generation, we pick the pockets of the young. This of course is already happening with large employers subsidizing guaranteed defined benefits to the boomers and their parents while paying a relative pittance into the pots of younger generations.

If we really meant  “fair pensions for all” we could correct this situation and put defined benefit pensions on a CDC basis, where the pension paid would be based on affordability and dependent on a defined contribution from the sponsoring employer.

But the question  mark in the title acknowledges that the inter-generational transfer which is the complaint of those against CDC is already fully baked into our pension system to a point where inequality is accepted. Is it acceptable?

The FT webinars , which go on all week, kicked off yesterday (Monday 26th) with a look at the housing market where the boomers have claimed their equity and “generation rent” have to accept a less satisfactory way to finance their accommodation.  The cost of housing will no doubt be a theme in Heidi Allen’s talk at the LCP conference, “How can employees think about the future when they’re struggling to cope today?”

This LCP event kicks off with a double header from Steve Webb and Richard Butcher discussing the future of pensions. To me there is no future for pensions without a proper planet to live on. The capacity of our greatest reservoir of wealth, to mitigate the risks of climate change is enormous. By the time we reach 2050 and find out we have reached the goals we gave ourselves in Paris, I will be 89 and my son 57.

The third great inequality is between the world I will retire into and the dystopian vision I see for Oliver, if my generation does not properly embrace all aspects of ESG.

Our debt to our children

I am aware that most of the readers of this blog are over 50 and that we have benefits from better pensions, better housing prospects and a better environment than we hand on to our children.

We are in debt to our children and it is our responsibility to ensure their inheritance is a good one.

I will be spending much of today pondering how this debt can be paid.

Alternative event

As a footnote, I am aware that Professional Pensions are also conducting a DC conference in parallel with LCP’s. I am very sorry that I cannot attend both – especially to hear Jessica Rigby and Paul Bannister of Evolve talk on the complete retirement story.

For those not booked in with LCP, this looks a tasty alternative.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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