The meeting of minds between Hymans Paul Waters and Lisa Deas with Slaughter’s partner Chris Sharpe was a Teams affair. Slaughter’s offices are a mile from where I watched it, Hymans half that, how I wanted to be in one place with the three of them.
As this blog is also a personal diary, I am including a shot (above) of my screen yesterday morning and making do with three linked in snaps of a lawyer, an actuary and a Hymans partner (who worked with me in 1995 at Gissings!).
I am getting used to asking questions at CDC events. I got in the question –
“how can I swap my DC pot for a CDC pension”
to the Pension Minister – the answer was to wait for a couple more iterations of legislation (or some such waffle). My question yesterday was
“will CDC increase the amount being paid by sponsors for our pensions?”.
Paul Waters, much to my surprise and delight, gave me an answer out of common sense and not out of the legislative and regulatory hymn-book.
Paul said that he did not think it would prompt more contributions. Why not? Because if you have just signed up to giving a pension that should be 60% higher just from being a proper pension, why fund it more than you are the DC plan. Indeed Waters explained that he expected that some employers would be tempted to take contributions down.
While there were two excellent presentations from Deas and Sharpe, there was something spontaneous and sensible about Waters’ response that made it the highlight of the morning.
To my mind, we are now at a tipping point when control of pensions can pass back to employers who have rather lost control during the DC interregnum between DB and what is to come – a pension without guarantees.
When employers – big or small – get wind that they will be providing a pension scheme, then they may start thinking the pension deferred pay and the contributions part of the reward package. That will make the employer contribution rather less important than what it earns the member at retirement (a quotation for which should be available at any point of the journey from joining to taking the pay in retirement).
If we stop thinking of CDC as about defined contributions and start thinking of it as deferred pay then employers will start thinking of their contribution as part of pay. That may well lead to some very interesting discussions with staff, unions and with each other on the remuneration committees or pay teams of employers.
It is a way of thinking that we have not reached yet – generally. But I think that Paul and I (who did start working together in 1995) are as one.
Hymans, if you have a copy of yesterday’s event, please send me it! I will post it on here if you do. That’s because there was some great information on it, information vital in decision making prior to authorisation starting next July.
But best of all, we are starting to get people thinking of CDC as deferred pay not defined contributions! That’s splendid