I am pleased that Professional Pensions ran a one hour discussion on the workplace pension that runs with CDC. I phrase it like a car manufacturer would introduce a car that runs on electricity, it is still an idea that runs against a quarter of a century’s development of individual pots as how we travel to and through retirement.
I think how electric cars are eating into the new car market and it’s because people were prepared to build the first wave of them , Government prepared to support them and eventually we are finding a new way to drive that makes sense in a lot of ways.
At this meeting was Jonathan Stapleton, who is a fearless promoter of what makes sense. With him were Massi Delle Donne of BlackRock, Chintan Gandhi of Aon, Joanna Sharples of Aon and Paul Eagles of TPT. All have earned their right to speak for CDC, you can read their bios here.
I couldn’t stay to the end but I listened to three quarters in the corridor of a hospital and had a question in my head
will CDC eat DC master trusts over time?
Massi Delle Donne gave us the answer, the legislation devised for British CDC has been a development of DC schemes , levelling up towards DB. It is not, as has happened in other countries a down grading of Defined Benefit pensions.
I have slightly changed my position, CDC will not replace DC master trusts but it will be its child!
Thanks to Professional Pensions for posting a link to the hour long video which is here
Jonathan Stapleton
Eat master trusts?
BlackRock estimate a third of the DC market converting to whole life CDC. TPT claim to have six employers committed to go with them a year before launch. TPT have worked out that unions are vital to the growth of whole of life CDC in a way that no one envisaged eighteen months ago.
Retirement only CDC got an airing and Joanna Sharples gave an answer to how it works as a rival to guided retirement , taking away the uncertainties people face. 96% of the people in the Aon’s master trust use Aon’s default and logic would extend to decumulation. For Jo , protection against them living longer than expected is tops, providing protection against inflation eating the income over time.
In five years time BlackRock emphasises this taking on CDC for their staff is something that that employers can do proactively. TPT emphasises the importance of a whole of life experience for people and Chetan Gandhi suggests that CDC gives employers and trustees a full suite of options. To wrap up Jo Sharples calls for CDC to be well used by the turn of the century.
CDC master trusts – the next generation?
I learned in this session how to consider UMES CDC the child of master trusts , one that will in time become a choice for all employers large and small.
It is good to see two master trust providers TPT and Aon speaking with such enthusiasm for whole of life CDC, the third – BlackRock started a master trust and passed it on to Aegon.
As Chetan said, anything new takes some time to bed in and there will doubtless be opposition to change but good ideas do not get stopped for ever.
The proof of the success of CDC workplace master trusts will only be with us over time but it is good that Royal Mail’s CDC has started with a good year. There is proof that it can deliver, the investment was managed by BlackRock.
If you want to hone in on one or another of the sections of this excellent session they are here. It is rare that I make it through an hour of discussion without a difference of opinion but this is that rare thing!
Thanks to all.
