I am so glad to read this story in Professional Pensions this afternoon. Like I am sure, all aspiring CDC proprietors , I have been worrying about how we could possibly run a carers CDC plan for carers. There are 19,000 employers and a workforce who move from one to another over time.
But as all DC workplace providers will attest, these small employers are not best positioned to manage auto-enrolment and administration is (how do I put it?) …hard.
I have told Unison, who are behind this, that the best bet is a Government Scheme – and suggested a conversation with Nest.
A commercial CDC scheme could on this proposition but it would need deep pockets and a long term tolerance of making profit.
The Government have gone one stage further and promised a collective (CDC) pension scheme.
Scheme announced by health secretary Yvette Cooper during Labour’s annual conference
Secretary of state for health and social care Yvette Cooper
The government will launch a national collective pension scheme for care workers.
In her speech, Cooper said it was “wrong” for those workers who “work hardest to help others maintain dignity and respect in old age too often get nothing back from retirement themselves“.
She added:
“We will introduce the first ever national collective pension scheme for workers in the care sector – fair pay, fair terms and conditions, and now a proper pensions scheme to give our care workers the respect that they deserve.”
Commenting on the launch of the scheme, Hymans Robertson head of collective defined contribution (CDC) Lauren Branney said it is “encouraging” to see the government recognise the opportunity CDC pensions can offer for both workers and employers in the adult social care industry.She said:
“This is an industry particularly well suited to a sector-wide CDC scheme. Workers frequently move between employers, many hold multiple part-time roles. Furthermore, the workforce is predominantly female, with a greater likelihood of career breaks and varied working patterns. Rather than building up a collection of disconnected pension pots, a sector-wide CDC arrangement could allow workers to save in one place throughout their careers, simplifying retirement planning and helping deliver better retirement outcomes.”
“Yvette Cooper’s comments are an encouraging signal that policymakers recognise the role CDC could play in supporting a vital UK workforce while helping more savers achieve better retirements. CDC has the potential to address some of the biggest retirement income challenges facing lower, and middle, income earners.
“They often face a savings affordability challenge during their working lives and a retirement adequacy challenge in retirement. By pooling longevity risk and investing collectively, CDC can provide higher expected retirement incomes than traditional defined contribution arrangements. It can provide an income for life while also removing much of the complexity individuals face when making decisions about retirement income. There will be trade-offs that come with CDC but overall it offers an excellent opportunity for the sector.
Branney added:
“In pensions, where policy decisions can take decades to bear fruit, stability and long-term thinking are essential to success. The recognition of the role CDC could play in UK pensions by government and wider policy makers is welcome.
“CDC has benefited from continued support through successive governments, and it shows the value political stability can play in retirement policymaking. This continued backing increases confidence that it will become an important part of the UK’s retirement landscape and indeed can play a valuable role in supporting a vital workforce in adult social care.”
Well said Laura Branney.
I believe you are absolutely right and its polical expediancy to rob us of our State Pension. ounce again. That…