Paul Brice of BES Trustees

Paul has produced for trustees tempted by CDC a brief outline of the task they face and the people they must please. You can find it here

There are a number of people who may be interested in what Paul Brice and Bes Trustees have to say about being a trustee of a CDC scheme (let’s leave this at the workplace pension version for the moment).

First there’s the Pension Regulator who will have a proposition presented to them by the Trustees as early as August of this year.

Second there is the Proprietor, the executive of the scheme that appointed the trustees but are independent of it.

Thirdly there are the participating employer of the new CDC pension scheme

Finally, and most importantly, are the members in the scheme who rely on it for additional income to what they’ve earned so far in DB and DC.

There will be a few new to having money deducted from pay cheques market “pension” but not many!

For professional pensions?

We are not sure what marks trustees out as professional. Is it their qualifications , their connection with a Trustee Company or is it marked by their behaviour?

Paul has produced a paper that you can access from this link outlining the CDC Trustee’s responsibilities. My guess is that most trustees will be professional in being paid but I doubt that all will pick trustees from professional trustee firms.

Unions want representation for members (it could be union representatives). Employers are keen to have representation on the Trustee Board, rightly regretting the loss of control they’ve had on DC master trusts.

It seems to me a moment to take a step back and consider what the chief worries Trustee’s ought to be having about CDC schemes and which donkey they should pin their tail to!

We are dealing with a donkey that eats contributions  regularly from employer and employee- like a DC donkey. It turns what goes in to what goes out the other end and that needs to find its way to gardens to keep things flowering! What happens in the midst of the donkey is no business of people who feed it or get manured by it!

But it is what goes on within a CDC scheme that the Trustee needs to keep on top of, the investment of the money, the distribution of pension to pensioners and those waiting to get pensions.

A new type of trusteeship that focuses on member’s pensions

This is a different type of trusteeship than that which happens in DC, where the value of units in the pot is what matters to the member. Nor is it like DB where the deficit or surplus is the matter of interest to the employer.  The risk is shared by members and trustees are there to ensure fairness between all groups.

This I think is a type of trusteeship which is quite different from DC and DB in that not only is this not about pots and surpluses and deficits, it will be about the pension increases that people get from year to year. This is a conversation between all the stakeholders mentioned above and centres on the Trustees who will be held arbiters on the decisions taken on the wage in retirement and the increases in pensions those awaiting payment.

Arbitration between the stakeholders in a CDC scheme will be interesting. There will be good and tough times – and in every time, there will be need of competence and compliance