Many of us (the three in the picture especially) have been waiting over a decade for a CDC plan to run and to be in. The three of us were at The CDC Forum CIC event on Wednesday when the Pension Minister announced we were going to get that opportunity.
I asked Adrian Boulding afterwards if he’d speak with me as “Director, The CDC Forum CIC”. He came back to me , accepting a chance to speak on Tuesday next (28th October).
I’m looking forward to it. As you know I’m hugely positive about CDC. And I believe that we can use the legislation we have been given (and expect to be given for Retirement CDC) to create schemes that will deliver for members and grow to the sort of scale that meets Government ambitions that pension schemes should be big.
I have been learning from Chris Bunford who for several years worked within LCP developing actuarially a pricing mechanism that makes pensions smoother and fairer using actuarial science and common sense. I come to this after three years trying to replicate the power of CDC in a DB environment (work which will now be translated to CDC). Adrian is a power force within what the “Friends of CDC” has developed into.
We will be talking on Tuesday and bringing to the conversation bright people who we know enthusiastic to get CDC on the table not just for those who can build rights for the whole of their lives but for those at retirement right now, people like me. Yesterday I made it clear that it will be tough to keep to the Pension Schemes Bill’s Roadmap and offer CDC defaults to those who have saved in DC workplace plans and are now ready to get paid their pension
You can read about this in Jonathan Stapleton’s article below
You can read the full article here
You can read my blog which was published in the early hour of Friday.
That is why we are not wasting any time but getting on with building a CDC application ready for next summer when we can submit it, ready for 2027 so that retirees can go into a “60%” better pension if they’re ready and lucky enough to be in a workplace pension that goes CDC.
So here’s your invitation
Join here 10.30 am Tuesday 28th Oct
You are invited to attend our next online Coffee Morning next Tuesday
Next week Henry Tapper will be hosting a conversation with Adrian Boulding and Chris Bunford and Tuesday’s coffee goers.
They will be taking a deep dive into the possibilities of CDC now that the DWP has published draft regulations to “expand” CDC to all employers offering workplace pensions.
The UK government is introducing new regulations to allow Unconnected Multiple Employer Collective Defined Contribution (UMES) schemes and launching a consultation on retirement CDC schemes.
Join us as we explore:
- The expansion of CDC from early 2027- available to all employers and their workforces/
- How the CDC timetable need not let down people in workplace pensions “retiring”
- Discuss whether CDC is DC upgraded, DB released from its guarantees or a chance for both?
- will it give pension investment the clout to get Britain growing again?
- How can CDC schemes boost the pensions we can get by up to 60%
- The government’s consultation on Retirement CDC and why it’s separate from UMES whole of life?
- How to make it fair for all in both Whole of Life and At Retirement.
This should be a great session and hopefully you can gain more of an insight into the future of CDC pensions provision.
We hope to have a special guest to join us – you!
We hope you can…
I am concerned that the risk is being taken by the retirees and the number of DB failures to provide promised benefits are troubling.
Evidence for the 60% Claim?
Modelling from the Pensions Policy Institute suggests that single employer CDCs could deliver a significantly greater average replacement rate (47%) than currently delivered through annuities (40%), with even higher benefits seen for multi-employer CDCs as longevity risks are pooled (69%)
Source GOV.UK.
Important Caveats
The higher income comes with trade-offs: pensions in CDC schemes are not guaranteed, which means the pensions paid to members can fall House of Commons Library based on scheme performance and sustainability.
Numbers and examples would help
How does the CDC improve on a joint life indexed linked 100% survivor annuity? Are individual DC accounts able to transfer into such a fund?
John , both Willis Towers Watson and Hymans Robertson have come up with the 60% improvements in whole of life participation of people in CDC relative to retail alternatives. The Government are using this number, I am using it. You can argue that it’s higher risk than alternatives (including transfers into public sector DB) but it is very hard to model everything to your request. I asked the question you asked directly to the Minister on Wednesday. He says that it’s under discussion. Actually you can only do it independent of saving once they approve a Retirement CDC plan, which is under consultation.