SHOCK!

Well I could have told you that any group collected by Sackers are likely to be pension heavyweight. Sackers is a law firm built around pension heavyweights who don’t embrace change until everyone else has. That is no bad things in one sense. There needs to be a conservative heartland and here it is.

I would not imagine Andrew Worthington (Pictured) is among those at his webinar who reckoned CDC will not get “significant” traction.

Sackers partner Andrew Worthington said: “The survey suggests that the biggest challenge facing CDC today isn’t necessarily the model itself but rather familiarity with how it works. As a new approach for the UK pensions market, building confidence will take time, like any innovation.

“It’s also notable that many respondents highlighted the possibility that retirement income could reduce as a key concern. In practice, retirement incomes under DC are already uncertain, fluctuating with market performance and individual decisions.

“CDC has the potential to become an important third option alongside defined benefit and DC. It gives employers certainty over contribution costs while giving members the benefits of collective investment, risk pooling and the prospect of a more predictable retirement income than many individuals can achieve through traditional DC arrangements.”

Worthington continued: “Similar CDC models have been operating successfully overseas for many years, demonstrating that they can deliver good outcomes for both employers and members. The UK now has the opportunity to build on that experience, but continued government support, practical regulation and increased real life experience will all be essential if CDC is to fulfil its potential.

There will be considerable opposition to the dismantling of an apparatus that is working very well for the pension industry. People are cautious when they talk of how CDC could deliver up to 60% more than accumulation followed by an annuity. They don’t like to push too far as the answer may not what they would like to hear.

I will not continue down this track, I have warned not to repeat the “up to 60% argument in public in case people take it serious. It is of course not my idea, it is the actuarial consensus that landed on that number and it was published last October by the DWP because they could find no reason not to!

That a group of people at a Sacker’s event can argue that CDC won’t catch on is like saying that house prices are becoming more affordable for those wanting to be first time buyers. Most people with housing equity don’t like that idea either.

Retirement income could indeed reduce in importance for those with wealth, indeed I expect most wealthy people will not want to lose the flexibility of a pension pot. But I suspect that those in the conservative heartland don’t have to worry about having neither wealth or sufficient income in retirement to be comfortable.

If presented with the article set out by Professional Pensions, they might feel a little affronted by assumptions taken on their behalf.

There is a lack of confidence that collective defined contribution (CDC) schemes will be widely adopted despite growing regulatory momentum, a Sackers poll shows.