This is a telling post . It chimes with much that I have written. Retirement CDC is a good patch to a broken model. Why wait for what you can get better today?
A note on players mentioned in this excellent note.
Collective Pensions (CDC) is being built today by more than TPT.
There are challengers on the way. They including Pensions Mutual. I say that with some authority – I am one of two founders . I lead the Proprietor and Stella Eastwood is CEO of the scheme.
A hat needs also to be tipped by another challenger, Arboreum (Collective Pensions) run by Adrian Boulding and Ben Fowler.
I say this as we do not occupy an abstract space as thinkers and commentators – we put our time and money where our conviction is ;- to create an UMES CDC as a Collective Pension. To create an alternative to a DC workplace pension.
Those who enjoyed the golden years of pensions (DB) from 1945 must have realised that following the baby boom there would be more workers per retiree so that DB and pay as you go models would work. I don’t see much evidence of schemes that take account of the lower birth rates the longevity and the dull performance or the required savings rate that will provide for the reality of 100 year life. Which leaves working longer probably into age 80+ the top decile might give 5% above inflation but it is going to be harder to excel the larger the big pot.
Triple lock seems to be unsustainable
The opportunity for the adviser is in providing risk capital for start ups where EIS beats pension for tax efficiency
Isn’t the “cliff edge” with R-CDC basically the same as buying an annuity except with, apparently, up to 60% income? Why is the cliff edge and inability to back-out later with an annuity OK, but with an R-CDC pension not? Not all of us have the option to enter a CDC scheme during our working life and even those that are still working will have different employers and different schemes they’ll want to collect together at some point.
As someone that’s already retired I’m holding a reasonable DC pot that I’m considering turning into a pension when I reach state pension age. Right now my only option for that is an annuity. If the hype is to be believed a CDC scheme would give me a better outcome, but I’m going to be blocked from that? Really?!?!