“For professional use only. Capital at risk”
Here is a conversation about good retirement from DC workplace saving. But it’s not far enough for me and millions like me who don’t want a course in good savings behaviour!
I’m not professional and don’t like my “capital at risk” . I’m dependent on it to pay me for the next 30 years!
L&G have the answer in its DC savings product but people are failing themselves and need help to take better decisions. L&G have invested in encouraging people to get the retirement income that “they need”.
The message to people like me is clear, this is what i hear…
“This is not DIY because L&G are there supporting you into retirement”.
This message comes from a conversation between Jenny Hazan and Lesley Ann-Morgan that you can watch on this link.
There’s also a transcript of the conversation here, I think it the most cogent defence of DC as a means to help people save, However it is not an argument for pensions, it’s an argument for people to rely on L&G not just as their provider but as a financial coach and GP (if a medical term can be applied to financial failings).
I have taken this exchange towards the end of the conversation with Jenny Hazan concluding
What excites me most is seeing evidence that our approach is working.
One area I’m particularly proud of is our guided digital retirement planning journeys, launched in November 2024. They adapt based on what we know about members and what they tell us, break planning into simple steps, and take a more holistic view of finances.
We’ve seen 50% fewer members using the journey facing a retirement shortfall. One in three completes a full plan, and one in five takes a significant action — like consolidating pensions, adjusting contributions, or changing retirement age.
Those behaviours really matter, and we’re now seeing strong engagement from younger audiences too.
But there are value judgements here that don’t surprise. I am an L&G saver, have consolidated my plans into my DC “pot” and have deferred taking my pot till later in my life than I would have expected for my career (I’m 64) but I still don’t know what pension I can draw, what I have bought with all my savings over the years, I am totally in the hands of L&G whose values I happen to agree with. I made my mind up to have one pot, retire when I needed to and save as much as I can afford. My values just happen to be the providers, just happen to be everybody’s ideals. How L&G improve people’s behaviours is by selling them what we already know, but just don’t do.
But here we have something new, explained by the big boss, Lesley-Ann Morgan (who I’ve met and who is consummate business woman. These are her parting words
Jenny, thank you so much for joining me. That’s been a fabulous conversation and a powerful place to end.
My takeaway is that DC doesn’t have to be a DIY system. When it’s designed well, it can guide people, build confidence, and help them take action long before decisions become urgent.
That’s what DC Close Up is all about — focusing on what really matters and sharing practical examples of how the industry, and how we at L&G, are evolving to support better decisions and better retirements.
I would dispute that what L&G is taking away the DIY, what they are doing is what I started out 42 years ago and that’s encouraging people to do what keeps them saving with L&G and presumably spending their pots with L&G.
Whether that’s in the interests of people like me is not in question, it is the only alternative under discussion.
Here is L&G explaining that left to our own devices , a large number of us will fail but signing up to the L&G support , means we change our behaviour for the better and will have less chance of being poor in retirement. This is the adequacy question introduced at the start of the conversation.
I am not surprised that DC saving is being sold this way, it is the best that DC can do, but to suppose that DC need not be DIY is pushing the argument. Actually we DC savers are still taking all the risks , even if L&G’s savings product does a good job of delivering us a pot of money.
L&G are cutting down the number of bad decisions we make but we are still doing it all ourselves. That compares with DB, as Lesley-Ann says; DB is the place where decisions are made by other people and you plan around the promises you get. That to my mind suits most people who “don’t get out of bed and check their pot value”.
Here is where CDC provides an alternative. Rather than teaching us how to take risks , it pools the risks so that we all support each other. For many people, myself included, there is an advantage of sharing risks and it’s because I do not want to be proud to be the “one in three who completes the plan” (see Jenny above).
I think we can do better and have done since starting to think collectively (15 years ago). There will be a portion of savers for whom DC saving (and drawdown saving) will suit but for the majority of us, taking the risks of failing later on, is not going to be solved by being taught how to behave. We need to have the pension done for us.
Thanks for this conversation, L&G probably take us as far as DC support can. But it’s just not far enough for most of us! I don’t want a course in behaviour , I want a pension!
I am confused…. Surely a CDC model exists and is awaiting approval ??
Do you have a simulation of the benefits offered say per £100,000 of pot converted?? From earlier posts it is implied that this will be better than some alternative by as much as 60%
When it exists you can convert your DC and enjoy the benefits of shared risk until then you can max out your pot subject to current rules of subscription and benefits crystallised
Worth noting that the 25% past promise is now capped at an arbitrary limit relating to BCE
CDC is being released in stages. Stage one was for Royal Mail and single employers, stage 2 is as a workplace pension to rival DC master trusts and GPPs, the third stage, which is under consultation, will allow those DC master trusts and others to offer CDC as a retirement option.
You may expect up to 60% more pension over your whole life but the number is smaller if you swap DC in accumulation for a CDC pension when you retire.
I listen and hear parts where the marketing gloss creeps in
• “Value for money” framing
• Sounds substantive, but still ill-defined in practice, after all
this time.
In reality, a regulatory captured mechanism to:
• push consolidation,
• weed out some poor schemes,
• justify higher-fee strategies? (e.g. private markets).
It does not guarantee better net outcomes for members.
Private markets/illiquids in DC defaults
• This is a big “industry” push—and the most questionable.
Claims:
• higher returns,
• better diversification,
• “DB-like” investing.
Issues:
• higher fees and complexity,
• valuation opacity,
• unclear net-of-fee returns at scale,
• governance burden shifted onto members who don’t choose this.
There’s no strong evidence yet that these investments will materially improve retirement outcomes for typical DC savers.
“We’re more innovative than other countries” is spin.
The UK is actually catching up on decumulation design; Australia and the US and others are ahead in different ways.
A UK “default retirement solution” could be useful—but it’s not inherently superior.
The 50% reduction in “shortfalls”
is the most marketing-heavy claim.
Likely driven by:
• modelling assumptions,
• selective cohorts (engaged users, 20% or less),
• behavioural prompts like “increase contributions slightly.”
It certainly doesn’t mean people are now on track for adequate retirement incomes in any absolute sense.
What’s missing (and matters most), the critical gap: none of this addresses the core structural problem of DC.
Contribution rates remain too low
• Auto-enrolment at ~8% total or less is insufficient.
• No amount of dashboards, apps, or private assets fixes under-investing.
• Investment risk, sequencing risk, longevity risk are still on the individual.
DB pooled and absorbed these risks; DC has always individualised them.
Outcomes remain highly unequal
• Broken work histories, low earnings, gig work → fragmented, small pots.
• The people who most need help are least likely to engage with apps or guidance journeys.
• No real risk pooling (yet)?
• CDC is mentioned, but still sounds niche and politically constrained.
• Without pooling, DC cannot replicate DB-like income stability.
Final thoughts
• Yes, these developments may marginally improve DC outcomes:
• slightly lower costs,
• slightly better investment design,
• fewer obviously bad retirement decisions.
But they do not fundamentally change the equation: Most DC “savers” will end up with smaller, more uncertain incomes than their DB predecessor “pensioners”.