I’m interested in what Vidette’s Alison Hatcher thinks. Firstly, I worked with her when we were contracted to Pension Superfund, secondly, she is going to be a trustee of the Pension Trust’s CDC scheme, (subject to authorisation). The third reason I’m interested is that she talks as a woman, something that I won’t ever be; her other trustees will be women too.
I was asked by a union to write an article about how CDC would ease the Pension Gender Gap and though we have some experienced women in our team , we didn’t get beyond the opportunity to offer unisex pension conversion rates .
CDC schemes may offer unisex pensions as we intend to or they could make pensions more expensive for women (because they live longer). It’s a tricky question that has haunted insurers and pension schemes for well over a decade.
You can read about what I put down here – (this is not an easy thing for men to do!)I argued that men may have to change their attitude and Alison Hatcher convinces me of that. Men have a lot to learn.
I was uncomfortable making generalisations about the strengths of CDC playing to woman more than men.
But in a conversation published in Professional Pensions with fellow CDC trustee- Kim Nash, Alison is clear that the arrival of CDC could be a breakthrough moment for women. That breakthrough seems more than a technical matter.
It is good to see women taking charge of CDC governance. The Friends of CDC, put together by a group of men , hardly had a women at the meetings that I went to.
That is not to say that there were good women actuaries, investment gurus and pension trustees. But I did not see women banging the drum for CDC and I have not till recently considered how CDC might have advantages for women.
I hope that the Pensions Trust appointment of three female trustees opens CDC up to both genders to value this type of pension. Here are Alison Hatcher, Kim Nash and Venetia Trayhurn, three professional trustees working for Vidett, Zedra and Falcon Trustees.
I can see what CDC is good for female women trustees – so far it’s 100% success for the gender for multi-employer CDC workplace pensions. Other prospective proprietors have yet to declare the appointments of their trustees so let’s enjoy this unanimity of the female gender!
But what about the beneficiaries of CDC schemes , how will a whole of life pension scheme be a gamechanger for women when it comes to pensions?
I am not of the gender to answer this question and am happy to take Alison’s word for it
As a working mother and trustee, I see the human cost of this every day. The current individualistic DC system – a solo sport where the member bears every risk – is inherently weighted against the female career path.
I can see some downsides for DC but I am bound to point out that if you get it right you can do well out of DC. DC does give you advantages like freedom from pension. But I guess that sounding competitive is making me sound male! DC thinking may be holding us back from closing the pension gender gap.
What men cannot easily understand is taking maternal career breaks though I hope that is beginning to change.
Women are more likely to take career breaks or work part-time, which currently results in a penalty where their savings simply stop growing. Because women live longer but have smaller pots, they face a decade-long risk of outliving their money compared to men.
I think the savings do keep on growing in DC but not the contributions but I sense the pain and the release from it that Alison talks of.
With the arrival of collective defined contribution (CDC) schemes, we finally have a middle way designed for real lives.
I totally agree, people who go unpaid when they work, (which has long been a feature of being a Mum) , can see the loss of deferred pay at retirement – so long as the CDC provider offers software which allows them to understand the cost of the career break
I think this a great idea for CDC providers and I’ll be having a word with our tech team to help women understand the cost of being a Mum. Men in their partnerships should be rewarding them – with understanding . If there is no understanding – maybe finally – with compensation.
We think it critical that spouse’s pensions are included as a feature of CDC pensions so both women and men feel protection through rights to the partner’s pension in marriage.
The conversation Alison has with Kim centres around the empathic relationship that women have with other women and how the all female CDC trustee board is the better for the absence of males. I won’t dispute this.
Similarly, I won’t dispute Alison’s argument that women are particularly “burdened” by the complexity of DC.
One of the most significant burdens of the traditional DC model is the so-called complexity tax – the expectation that members must become amateur investment managers. For many women, who statistically value financial security over playing the market, this burden is a deterrent.
I suggest that men suffer a different but related burden, which is to think they know what they are doing. I have suffered from this affliction and totally agree that handing decision making to trustees and their advisers on the management of a pension fund is good news for men, women and to collective funds.
Women may win on this but here I verge on promoting CDC over DC without balance – Alison was a TPR non-executive until recently and knows how important balance is.
Alison sees CDC as an income thing and that this plays to improving pensions for women . Kim Nash points out, CDC’s “income for life” mindset allows members to
“focus on planning, living, and enjoying their retirement rather than worrying about how much to spend and when”.
Concisely , Alison makes a subtle point
The ultimate goal is to move beyond the abstract pot of money and build confidence.
Kim Nash responds that communication is everything and Alison Hatcher asserts
By pooling risk and returning the burden of management to experts, CDC offers more than just a financial product – it offers women the certainty they need for a longer life expectancy.
I congratulate TPT in breaking through with CDC. TPT has broken through not just with female trustees but with a product trustees clearly manage with women in mind. I hope that goes for CDC schemes in general and that men like me can avoid the misogyny that we may have displayed in the past.
There should be as many female friends of CDC as male. Alison Hatcher article puts women at the centre of CDC’s breakthrough.