It will be interesting to see how the pensions industry reacts to Yvette Cooper’s announcement that the Government’s introducing “A first-of-its-kind national collective pension scheme for care workers”.

It will be as a collective pension (the Government’s alternative wording for CDC) and that means that 19,000 employers , most of whom are micro employers, will be able to offer staff a better pension. Whether these employers will switch their workplace pension from their existing “choice” of DC workplace arrangement will be interesting to see.

To what extent being a part of this collective will become the “norm” for employers depends on how seriously they take pensions in the reward they offer staff. But from my discussions with the main union involved, anything that costs the employer nothing but improves the deferred payment to staff is going to be very popular.

I spoke yesterday at a Prospect event where our Prospect host reckoned that the advantage in terms of pension of CDC over DC was equivalent to a 3% employer contribution increase. That means a basic AE contribution being boosted from 3% to 6%.

If the deal to 19,000 employers is an increase in the reward package of 3% of salary then I am quite sure that Care Worker employers will find the new arrangement irresistable.

No doubt there will be a lot of contention amongst pension experts about governance, investment, administration and most of all about member communication. There will be accusations of CDC not being transparent, being unfair to one age-group over another and of nothing being guaranteed. I have no doubt that on one side there will be those that argue that these carers should be in the NHS or LGPS schemes and on the other side who argue that existing workplace DC workplace savings tool are good enough.

The truth is that employers are working on thin margins and will never be able to compete with each other while paying for staff to be in a DB scheme. As for DC workplace schemes, they are treated by small firms as an extension of national insurance with the outcome of the saving being no business of them. Staff move from one employer to another, get a multiplicity of pots and have very little help on how to spend these pots when they decide to call it a day.

Clearly the Government see these DC schemes as unsatisfactory and Yvette Cooper (married to Ed Balls) has access to a pretty smart pension minister who has one foot in the Treasury and the other in the DWP. I’d like to hear Ed Balls’ comments on his wife’s pension promise!

To me, the decision of this Government to use the new UMES CDC multi-employer solution is an endorsement of the plan that it needs. This will be a scheme that parallels Royal Mail’s in terms of numbers who can participate. It will be a fiendishly hard scheme to administrate since there is precious little experience amongst those trusted with payroll in many of these 19,000 employers.

Most of all, it will call on Government to come up with communications to Carers whose pension understanding may be close to zero. We have seen that most ordinary people feel the Government is cutting the state pension (rather than decreasing the rate of increase by adjusting the triple lock).

Will the Government be trusted with the workplace pension? I suspect that the one thing all people do get, is the arrival of a payment once a month from the DWP as the state pension. This needs to become the Carer’s second pension , paid for by the employer (as a defined contribution) and paid out by the Government as a new kind of state pension.