CDC investment strategy is twice as important as the contributions paid. – say LCP. I am understanding the history of money with them in the second part of their epic on the feasibility of CDC

I am really pleased that LCP have produced a new chapter in their book exploring CDC in the UK. Their chief finding is that investment is 70% of the success of a CDC plan, Here they look at investment secret in more detail

Ivan and Laun are from LCP’s investment consultancy in London. They are writing of a subject that will be topical to anyone at Easter this year. How can we help people feel comfortable that whatever is happening in the market, they will get the pension they expected, I have a DC pot and don’t feel that way!

I hope they do not mind me – as someone who lived through most of this- make my comments

The history of pensions since World War II

My comments on the post-war years start with recovery

The early years following the war are seen s a period of great growth when CDC would have picked up on returns from investing in real assets (equities and infrastructure). I was only on the planet for the last two of these years, but have spoken with my parents and grandparents who call them the “good days “.

There followed years when things went wrong and Britain faltered

The period that followed is the one I grew up in. It was a time when I was at school and college when Britain suffered from industrial strife and found itself unable to compete globally. I am just old enough to remember it felt like young people must be feeling today. This was a horrid time for our money but pensions survived.

The twenty years when Britain boomed and millennials like me prospered

It was a good time to be at work and a time when investments from housing to shares grew fast. This was a time of optimism among my generation and a time when older folk like our parents begun retiring on healthier pensions that had accrued since the war

A falling back again

This last 20 years has not been so good. We have tightened our belts as for much of it we have been in austerity or in the crisis caused by a pandemic. But it has been a good time for investments and many of us who have stuck the course have been rewarded with returns on our DC. It is not so much the capital that troubles us but the lack of income to retire on when we earn less.

Here we can look back and wish we built up pensions rather than pots…

A pension for all times

Like Ivan and Laun, I can see huge changes in the way things worked for working people since the word war, some from  experience but also from the market data they have collected and present. Here are their conclusions

I look forward to  commenting on “what this means in practice”.  I do not think we need to be experts to understand pensions in the sense that consumers have to. For consumers who become pensioners, what has been consumed is the work of consultants and proprietors of plans that take them through retirement with consistent, robust income paid to them throughout the final stage of their life,

It has been remarkable to spend some time thinking historically about the last 80 years and about how pensions have survived and grown over that time. We now need to return to the fundamental thing we consume, the money we have put by over a lifetime paid as a pension.