Jo is right, how we have done with our savings should be important to us in the UK as it is in her native Australia
But it goes further than the analysis from Corporate Adviser (good as that is)
Olly and Dean are right, the best way to judge the master trusts is by what they have done for their savers.
This cannot be done by maths and actuarial assumptions, performance needs to be measured using the data from member’s savings. That tells you the value of their money saved .
It is best done with individual’s data because DC is not collective but individual, we all get our own results and though these can be aggregated, the risk stays with the saver.
My firm, AgeWage, has a system to measure how the savers of a DC workplace pension have done and the system can establish whether there has been advantage gained by those who have chose their own funds against those who’ve allowed their payments to be invested in the default.
Using individual’s data picks up on what Olly Payne , the reward director and international pensions director of Ford.
To make a fairer comparison for consideration of workplace pension providers, I’d be interested to see how the results changed if it was based on monthly contributions for 10 years?
This is the crux of the problem for the value for money project set in train by the DWP and now being developed by TPR. We cannot tell people the value for money that they got by using comparisons based on actuarial brilliance, we need to measure how people have actually done and that means using their data to measure their experience.
Dean, who like Olly is an actuary, is prepared to use the short-cut that Jo has publicised and for a banner, I think he and Jo are quite right. Jo is right to conclude that over time equities will outperform funds that balance growth with defensive strategies (the problem for those she quotes as underperforming). Those who support CDC know that in the long term you get better pensions from investing for growth all the time!
And of course you don’t have to be big to invest purely in growth, the likes of Lewis Investment master trust has proved that.
But this is too abstract for ordinary folk. If we are to move to a culture where people are interested in value for money from their pension saving , we need to give them that is more personal to them.
We should try looking at the savings we make and the pot we get back! It’s the only way to give those who take all the risk , a valid measurement of performance that they can understand their defined contribution VFM.
Here are the heroes of this blog!
