CDC isn’t much good and we have thought about a name that people would relate to. We have found it in a phrase used by the CWU in explaining to Royal Mail workers what was coming.
Retirement Wage is a wage in retirement; we’d like to use it in our title for CDC and this is why
- We see CDC as an extension of pay people enjoy from work
- Tax-free cash from a CDC plan is designed to give the flexibility that can be afforded from a pension
- We see a bifurcation in workplace saving between schemes that offer flexibility and wealth to manage and schemes that pay deferred to pay
- We think that many workplace savings scheme should not be called pensions as they do not provide an income
People may get wealth from inheritance, scaling down the house or many other sources but the only replacement for wages (for most people) is a pension. For the people who CDC will be aimed at, pensions are largely lacking. The State Pension is not enough to live on , workplace savings do not provide an income.
I am conscious that if converted to default retirement guidance a savings plan may go somewhere between the gap between the current freedom and the previous conversion to an annuity but neither are comparable to A Retirement Wage.
A way of looking at CDC that makes sense to people
CDC has not caught on yet and will struggle to do so. It is hardly catchy or worth a conversation. If you look it up on google it will confuse it with an American Trademark
This is hardly a positive association.
No disease to prevent – Retirement Wage is something to enjoy.
Saving for retirement in a workplace DC scheme is no disease nor a workplace CDC pension scheme. To technical minds the two are distinct and different. But to the ordinary person the difference between pot and pension has become so confused since 2014 that what is received from the State at State Pension Age has nothing to do with what has been saved for.
My view, and those of my colleagues, is that people want to know when they can retire with a little more confidence. To some extent they will see what is coming their way from the Pensions Dashboard which shows the income that can come from DC pots if transferred to level annuities and this is a start. It is not the end and just as the Dashboard arrives, so will guided retirement as a default. Guided retirement has yet to be accommodated on the Dashboard and it will probably find a place around the time when Retirement CDC arrives as a way to convert pot to a Retirement Wage.
Retirement Wage ; a brand making sense of workplace pensions
My conclusion is simple. Retirement Wage is a good name for CDC pensions and should be adopted by whole of life UMES schemes immediately.
The public have yet to cotton on to what CDC and neither have most employers. We are in the stage before the launch of auto-enrolment in early 2012 with decisions needing to be taken by large employers.
They can adopt the brand to talk of CDC as an employee benefiting , boosting their wage in retirement. Working people can plan for what and when they can wind down or stop working.
This phrase does not need a lot of understanding; but it makes sense of CDC to employers and to workers alike.