We intend to rely on the trustee’s fiduciary duty to act in the members best interests when developing the suite of products and services. However, we will keep this under review and may introduce further requirements separate to the fiduciary duty if what is being offered is not obviously in the members best interest.

With these considerations in mind, DWP will at the earliest opportunity place duties on all trustees of occupational pension schemes to offer a a range of different decumulation products and services to members at the point of access.

So what could these different decumulation products and serrvices be. The response is very lukewarm to CDC

We have carefully considered the role of CDCs in the pensions landscape of the future and see them as a potential future model for pensions. Schemes could consider a CDC option in decumulation for their members consistent with the market developing, which could be a default offer to their members.

We therefore intend to continue to work with the pensions industry to explore how to establish a CDC decumulation model that works in the UK.

DWP believes that trust-based CDCs have the potential to be a promising future model for pensions and could be actively considered by occupational pension schemes, including as part of their decumulation offer. The department is putting in place a regulatory framework for multi-employer schemes to offer CDCs, and we support the market development in this area.

Alongside this consultation response the department has issued a call for evidence on access to CDC arrangements and opportunities to stimulate the market.

Considering we have yet to have one implemented CDC scheme and no schemes available to small employers , let alone individual savers, I think this has dragged on far too long.

Much as I would like to have my CDC benefits overseen by the CDC Code, I would rather have a collectively invested pension scheme with longevity pooling and so long as the fund I use to get a non-guaranteed pension is overseen by the FCA  – that is enough for me.

There are plenty of ways to convert a pot to pension and they aren’t all called “annuities”.

CDC pensions sound great but they sound a lot too much like DB pensions for employers to let their trustees provide them.

Annuities are looking a good “lock-in” for now but most trustees aren’t pushing them for fear of being seen to be “anti-freedom”.

Drawdown is now being touted as a guided product with non-advised support packages being talked about by everyone (and implemented by very few).

Everyone is sitting on their hands waiting for clarification from the FCA on the “advice/guidance” perimeter. Having done my time in the FCA sandbox , I’m pretty clear that guidance includes the provision of information necessary to take a decision.

I’m also clear in my mind that most trustees are terrified of signposting anything in a way that might be considered “.the provision of a definitive course of action” (my definition of advice).

What the DWP is calling for (and what Nausicaa Delfas is also calling for) is for DC trusts to become “full service providers” and that means trustees having to provide a default decumulation option. This is necessarily giving people a definitive course of action and DWP are going to have a tough job convincing trustees that they are not giving advice.

Trustees tend to be “risk averse” and corporate and other professional trustees are risk averse for a living. So I see no appetite from trustees to share risk in a CDC arrangement.  Even if the sharing of risk is supposed to be between members, trustees know that risks tend to revert to sponsors (as KPMG found a few years ago). This is simply because when things go wrong, people look for people with deep pockets to sue.

Proposing drawdown as a default decumulator misses the two big guarantees that people want from pensions ;

1. A guaranteed income
2. A guarantee that the income will be paid as long as they do.

Even if trustees “hand-off” to organisations like Guiide, Retirement Hub or whatever Paul Budgen is coming up with, the hand-off may be considered a professional foul and risk an wanted red card from the judicial system , or regulator or both.

There is definitely a need for a default decumulator and as I write, the last man standing is the annuity. If after eight years of trying to find an alternative to “having to buy an annuity”, we require people to buy an annuity, I suspect the public will regard this as the biggest cop-out since the pension dashboard.

The idea of a DC pension is not one that has entered the argument yet. But it is not impossible. In a world of capital backing for DB pensions, might we not extend that thought to the capital backed DC pension, where a reverse transfer swaps pot for pension?