The Government’s press release says that CDC schemes could increase retirement incomes by as much as 60%.

If you were offered a 60% pay rise, would you ask to have it deferred till 2029?

The master trusts assume employers will wait for Retirement CDC but there are several employers who want to go ahead as soon as possible. Why?

The Government’s (up to) 60% better pension is based on saving for the whole of your working life into a CDC plan. The figure’s worked out by clever actuaries from top consultancies who reckon the pay rise reduces to.

Hymans Robertson see the pay rise coming down a lot if you wait till retirement to transfer your pension “pot

“Retirement CDC has the potential to deliver between 25% and 50% higher income in retirement than a DC member purchasing an annuity or following a drawdown strategy”.

That’s Paul Waters telling us (check the link).  That’s a lot less than the 60% prediction for the whole of life (using the same defined contribution

There are also issues with timing when transferring DC pots into a CDC pension.

Pressure from unions and other employer representatives is building for action!

At this week’s session, the usual CDC enthusiasts  Henry Tapper and Chris Bunford will be  joined by recent converts Tom McPhail & Bobby Riddaway.

And we’ve had questions over the week about whether we should be targeting high levels of indexation on pensions in payment or stick with the required target of CPI. My favorite elderly actuary suggested that we might target CPI – 1% but that’s not in the rules. The odd thing is that the vast majority of annuities purchased are level so deteriorate in real value over the years they are in payment.

I’ve hear it argued that if we were to offer less than CPI , we would be risking too much too early with the possibility that we might in bad years have to pay less than the previous year’s pension. There are people who want pensions to be paid at CPI +1% or even more. What do you think?

A further question’s come in over whether pricing of pensions should include a pension to a dependent (even if we don’t have one) . Some argue that  people should have  to opt out of a dependent’s pension to avoid paying for others to leave theirs. Some argue that people ought to opt in so that the pension offered while you are alive is as high as it can be. What do you think?

Over 50 people attended our last CDC event, let’s see us building on that number today on 27th January at 10.30am

See you there.