Distorted facts
I was distressed to read some distortions in Professional Pensions (PP). First lets start with distorted facts
With the first CDC schemes now authorised, R-CDC is one default route under consideration by schemes. The WTW poll found 78% expect to review their DC provision over the next few years.
There are no “first CDC schemes” now authorised, there is one, of which WTW are scheme actuaries. The new authorisation period begins on Monday (August 3rd). Unless we find another Royal Mail (unlikely) we will have new CDC till 2027.
Really?
WTW has decided to skip the workplace CDC scheme (know by the DWP as UMES) and protect their DB £30bn DC scheme with what they hope will be Retirement CDC. We do not know what Retirement CDC will be, its authorisation will come out till the end of 2028 and new Retirement CDCs will not be launched till at least the end of Q1 2029.
A lot of talk and not a lot of provision
WTW are the only provider of a DC master trust who have promised a Retirement CDC extension so if you want Retirement CDC right now , you would have either to be participating in WTW’s Lifesight or transfer it into WTW to get access. Either way , the decision is three years away and I don’t expect people at WTW seminars are particularly typical of employers (even large ones).
The recent surveys of LCP and Gallagher have shown an appreciable number of employers considering Retirement CDC as an option of their DC review but we have not seen much interest in providing a CDC Scheme to date. Pensions Mutual (our one) TPT’s and Adrian Boulding’s Vestey family office one, are the only ones I know of.
A lack of independence?
Now let’s get back to the article (pardon me Alex Levy – I know you are new but you’ve been led down a long garden path).
Almost half of pension professionals surveyed are exploring retirement collective defined contribution (R-CDC) schemes, according to a poll conducted by WTW.
A survey during a webinar held by the consultancy found that, from a sample of between 40 and 65 respondents, nearly half (49%) have started exploring R-CDC but were at different stages.
This is a WTW seminar , not a Lifesight seminar. This headline is not a survey of what people are doing but of people who turn up and are sold an extension to Lifesight.
We have got used to WTW as an independent consultant as we know Hymans, LCP, Gallagher and other actuarial firms to be. Since WTW launched its master trust it has done very well both in sales and in performance. But even if and when it becomes a Retirement CDC it will not do what a workplace CDC can and will do.
WTW is not pointing this out . WTW is not giving an independent view. It is not encouraging its clients to look at CDC as a replacement to DC workplace pensions; for an obvious reason!
Is WTW so arrogant as to suppose that its employer clients may not want independent advice. Or do they think that Retirement CDC will be so right for everyone?
I went to the WTW Retirement CDC seminar at the Pensions UK investment conference in Edinburgh earlier this year. There was no session at the event on CDC other than this session. There is no noise coming out of the ABI or Pensions UK on CDC as a replacement for workplace DB pensions.
Meanwhile other advisers , together with the unions have been giving advice that focuses on what employers can do now or later. I think this fair, as advice and not as product based promotion.
The translation to product promotion
So this is how it translates from independent advice into product promotion
WTW head of UK pensions investments Pieter Steyn said this focus on stable income does not mean low returns, emphasising the benefit of R-CDC in sharing investment and longevity risk across members.
R-CDC should be preferable to other forms of DC decumulation for the reasons WTW state. But can it really be argued it’s better than the CDC we can begin to authorise next week? Is this really independent advice?
It looks to me the market’s being bullied into misconception; we shouldn’t stand for that!
