I spent yesterday afternoon and early evening with Hymans Robertson discussing what success looked like for them in the provision of CDC.

I have yet to see more than TPT and Pensions Mutual stick their heads above the rampart to be shot up though I think one “mastertrust consultancy” is planning to offer a multi- whole of life CDC from 2027 and the Church of England continue to plough its determined route.

For Hymans , CDC sees CDC as an extension of its work in DC as can be seen by what they consider themselves “experienced” in. Less contentious is their “capabilities”. I think that we are all inexperienced at “AIR” which I think stands for actuarial, investment and regulatory success. This is largely innovation though on a platform that will continue to deliver DC for accumulation and CDC in retirement and Blended DC- the kind of risk sharing that NEST is looking to deliver through its style of guided retirement, design and evaluation.

Well done Jon Hatchett and his team for what is being achieved at Nest , but it is a variant of DC and will I suspect become the benchmark for VFM in pensions in DC.

But Nest is not delivering CDC and CDC will offer a better pension (though without the freedom and flexibility).

It was good to have a discussion with the consultants to the consultants to Nest and one of the firms claiming that CDC provides up to 60% more pension than DC!

We focussed in our conversation on what actuaries do best, discussing concepts such as fairness and value to sponsors and members. Pensions Mutual is rather different to DC models in not aiming to offer value to larger employers by dropping its pants on its AMC.

All employers will get a share of profits and large employers will get larger shares than smaller ones as large farmers get larger pay-outs for bringing larger quantities of milk to the co-operative data. So our discussion of what dominates discussions of DC practitioners was brief – we do not intend to offer “variable pricing” though design collaboration will be with the founding employers who will help us design a CDC plan that works for them. It is inevitable that our design will be designed around the needs of early movers, they must have some advantage for taking some risk that the venture does not take off.

Our approach to the conversion we offer employers and their staff on cash received to pensions promised “factor update frequency” is dynamic. We look to use technology to ensure fairness across generations and we aim to eliminated subsidies between employers and within employers. If an employer has “special needs” we will consider a section for them, but the bar must be high, sections are expensive to set up, not least with the Pensions Regulator.

Our actuarial priorities are to deliver fairness and I am pleased that we seemed to be on the same page as Hymans Robertson.

So what makes for success?

As a salesman, it was sad that we did not spend longer discussing what will be popular! I am of the opinion that there will be different influencers on employer decision making. I think unions will be more important than they were in auto-enrolment DC workplace pension providers, not least because CDC is a pension in a way that DC has not been.

It is very hard to promote member experience without doing the job, I know as someone in pensions for over 40 years what good and bad member experience is and will look to deliver the best in an innovative way that matches what people (even those as old as me) expect from banks like First Direct and Starling Bank (my touchstones).

Our operations must embrace the best in interactions with employers over contributions and proper reporting to clients to build up a positive reputation. We know of one AE provider whose early failures have meant they have not kept up with People’s and Nest who got it right, these are the benchmark for operational succcess.

We will need to have the best governance, not trophy trustees but committed trustees who stand up for members.

We will need to have distribution. I am not sure that we can always underwrite who we take on as we would like but as a mutual our approach will be to accommodate clients under workplace pension rules. That means living with 8% of band earnings and high staff turnover. Mutuality has to have an inclusivity that commercial insurance does not need to adopt.

We do not see many providers coming to market in 2027, most of the mastertrusts will adopt CDC at retirement and the scheme design of UMES whole of life plans will be popular with employers who want a smooth ride for employees from saving to spending. We believe that whole of life CDC should give an infinite investment horizon and though the “continuity” rules may require a transfer of some fund assets into defensive assets, we see CDC schemes going for growth in a way that neither DB or DC have been able to do in the 21st century.

On all this we were remarkably well aligned with what Hymans saw as its blueprint to success.

Pensions Mutual will succeed by sticking to an approach that gives early moving employers their say.

Though regulators and consultants matter , it is the employer who is fundamental to CDC  success, the employer wanting staff  to get better pensions.