No more balanced diagrams please – we want 60% better pensions!

This morning I wroteabout taking CDC away from Lawyers and Actuaries. David Wrigley is a fine person and his approach is very balanced but we really need look no further than the obvious point, that CDC gives people better pensions than they would get otherwise.

The simple architecture of “choice” is this.

1. You get offered what for most people is the best – CDC
2. You don’t agonise over which is best and never do it
3. You don’t require people to take advice about which choice to take
4. You do offer Targeted Support for those who are agonising about their circumstances
5. You offer an opt-out for anyone who thinks CDC could be unfair.

What you stop doing after 15 years or so of worrying what is best  – is balanced articles and diagrams that show the world that you are balanced but end up making people “not bothered”.

I am pleased with the news that Parliament will have legislation set before it on Thursday tomorrow, which will allow the CDC on a whole of life basis to go ahead. A consultation about at retirement CDC will follow shortly.

Here is a committed diagram that shows that people would be better off getting in a DB scheme or a CDC scheme (thanks First Actuarial – I never stop using)

You get into an open sweet spot by joining one. If you are lucky enough to join an open DB scheme you join one, stay in one and make sure nobody closes it down.

If you can’t join a DB , you join a CDC scheme which may be a little better or worse than you are promised but will generally provide the certainty of being about 60% better than the alternatives.

There are of course alternatives but once you’ve started drawing a CDC pension or a DB pension then that’s it, you’re getting a pension for life, not a capital sum or something to leave to the next generation (or the taxman).

We need to stop being clever and balanced in doing nothing. We need to get on with things.

That’s why I want to take CDC away from actuaries and lawyers and other people who want to do a lot of talking and give it to employers , staff and to a group of people who can deliver CDC as soon as the Government lets them (new legislation please!).