A target income that is a mutual pursuit!

Johan Kriek makes some excellent points in this sophisticated post

There is a resilience needed if you are to invest the funds paid over in contributions and transfers as an inflation linked pension.

There will be times when the fund will not have grown, may have shrunk year on year. The resilience must come from conviction that investing in growth will eventually revert the fund to where it needs to be.

In the meantime, the pension paid to members is not impacted as a drawdown is or with-profits benefits had to be.

As Johan says, the people who are in the CDC scheme are sharing the risk, not the insurer (as does with-profits).

This is a mutual endeavour. There needs to be employees to run the endeavour but ultimately the CDC plan is a mutual of members – whether retired or awaiting retirement. Fairness to each other is going to be critical, a breakdown of trust between members is a risk that CDC acknowledges and must manage through trustees and those who advise them.

“In CDC, asset allocation is not merely investment policy. It is benefit policy”.

All stakeholders must be as one in the strategy of the CDC fund and it must be a resilient direction it pursues. There have been no such mutuals established in this country this century – they have been missed. Thanks Johan for reminding me of our intention.