I’ve been following a debate on twitter which includes several friends. Following rather than participating as I suspect I would express myself too vehemently and spoil the delicate balance that has been maintained between skepticism and endorsement of a third “collective” way to decumulate.
That this debate is happening at all , is encouraging. That it is happening with such nuance and without polemics is surprising . Judge for yourself.
Thinking about CDC a bit. Question for IFAs (won’t do a poll as I always mess them up). Wonder whether if there was a mass market CDC decumulation scheme (go with it) would you recommend that over freedoms/drawdown and annuity? Clearly lots of unknowns but interested in gut feel
— Dave Brooks (@PensionsDave) September 1, 2021
Default level of income?
— Dave Brooks (@PensionsDave) September 1, 2021
With that latter group perhaps providing for additional needs from non pensions savings so the drawdown is really the legacy – the keepback rather than the drawdown
— Hilary Salt (@RedActuary) September 1, 2021
I don’t like to recommend things I can’t easily explain.
— David Hearne, CFP® (@dontdelay) September 1, 2021
Prufund anyone?
— Alistair Cunningham (@Cunningham_UK) September 1, 2021
Until the CDC stops taking in members – what happens then?
— rob reid (@reidremoney) September 1, 2021
So what happens when 30% leave?
— rob reid (@reidremoney) September 1, 2021
If it winds up how is the split done? Or do the young ones always take the hit?
— rob reid (@reidremoney) September 1, 2021
I don’t think hope is good enough we need clarity on how the money would be apportioned with fairness being the key determinant and not the level of income the older members benefited from. I’m not sure independent trustees will want this gig.
— rob reid (@reidremoney) September 1, 2021
Understood, it’s not the employer or absence of one that concerns me it’s independent trustees who will be seeking escape routes or some kind of bail out protocol
— rob reid (@reidremoney) September 1, 2021
As a punter I am interested as a possible middle ground between annuity and drawdown and part of a layered approach to risk on decumulation. But need to understand CDC better first.
— Simon Apperley (@SimonApperley) September 1, 2021
that is a fair point
— Dave Brooks (@PensionsDave) September 1, 2021
And a no from me.
— David Penney (@DavidPenneyPRW) September 1, 2021
Yeh the question is definitely too soon. They’re not even legal, and may never be. But what’s twitter for if not some airy speculation?
— Dave Brooks (@PensionsDave) September 1, 2021
I totally agree. I wouldn’t rule anything out, but to rule in, I would need to do the due diligence first.
— Rachael Hall (The NHS Pension Specialist) (@hall_nhs) September 1, 2021
Preserving threads such as this takes skill and a kind of chairmanship, thanks to Dave Brooks for performing that function well. It’s clear that IFAs are not getting information on CDC and it’s interesting to know why. I haven’t read much debate on CDC as a decumulation option in the IFA trade press and mainstream pension providers are clearly not considering this as part of their product set (indeed they may consider it a threat to existing income streams).
Importantly, the FCA has said virtually nothing about CDC, focusing on investment pathways. But that might change if – after the autumn consultation with master trusts- Guy Opperman and the DWP push on with plans to offer scheme pensions to those with pots governed by the master trust assurance framework.
I am neither surprised nor disappointed by the final comment in the thread from Stuart Holbrook.
I don’t know enough about it, sounds messy, gut feel is no
— Stuart Holbrook (@stuartholbrook8) September 1, 2021
The challenge is clearly articulated. We will watch with interest whether attitudes change with time and whether CDC moves from being an occupational scheme issue, to a matter for individual savers to consider.