I’m pleased to hear that LCP pension clients are keen on providing good outcomes for their members, though I’m not surprised, that’s what they are paid to do!
Professional Pension people know that pension outcomes are better using CDC than DC. They also know that those not confident in taking decisions about turning their pots to pensions would rather have decisions taken for them.
I suspect that CDC is a little too “easy” a win for many consultants for whom complexity is rather more lucrative.
Professional Pensions can report
The biggest attraction of collective defined contribution (CDC) pensions is the potential to improve member outcomes and the retirement experience without increasing employer pension spend, an LCP survey has found.
The poll, conducted during the consultancy’s CDC webinar on 21 July, found that 30% of respondents were most excited by CDC’s ability to significantly improve retirement outcomes for an existing pension spend, while a further 26% highlighted its potential to improve the retirement experience for DC savers.
No noise from CDC providers?
But the Professional Pensions article does not report a second poll on the day which asked
The truth is that there is no budget for advertising a product which has yet to be authorised by potential proprietors and the trustees who run their CDC schemes.
I say this as I am a potential proprietor and there is substantial effort and cost in getting an UMES CDC scheme authorised. The door opens for authorisation but the cost of submitting the application is £77,000 upfront, the timeframe for authorisation is 6 months and the final version of what authorised proprietors and trustees can say about their scheme has yet to be published (we expect Friday this week or Monday next to get the final version of the CDC code).
As if the job of those “starting up” a CDC scheme was not hard enough. They are already in competition with DC master trusts who do have the advertising budget and can promote their idea of Guided Retirement Paths (aka “flex and fix” deferred annuities) and Retirement CDC – neither of which will be ready till midway through 2029.
It is in the interest not just for consultants but more critically DC workplace pension providers to encourage deferral of any decisions, no matter how obvious the advantages in terms of 1) member outcomes and 2) the retirement experience.
Fortunately for members, the people taking decisions about workplace pensions going forward appear to be C-Suite. CFOs , HRDs and even CEOs of large companies are taking interest in their pensions now that investment in British private industry from pensions looks imminent.
It is no longer the Pension Manager and the consultant who are all powerful in these matters. Just as with the use of DB surplus, investment into CDC looks much better for those running private companies than the de-risking they’ve had to pursue for two decades.
It is C-suite providers who see value for their money from pensions in the simple terms outline in the headline above and reinforced in the surveys conducted by LCP. Despite the huge amount of advertising from DC schemes for deferral of decisions, large employers want to get on with improving their pensions and so do their unions.
We’ll see a radical change in decision making on workplace pensions in the next year. Consultants must accept a change in employer’s priorities. CDC workplace pensions are simple for employees, provide better pensions and will be up and running this time next year.
