This is a really helpful infographic which has been offered to a knowing audience who use BlackRock’s website for information. It can be downloaded from this link.

At a time when Proprietors are building their “pot to pension” collective pension plans, Black Rock are building the choice framework that has yet to emerge. I expect most consultancies will provide this sort of service as advice, so it is helpful to have this for free!

You can read through the various infographics and web-pages BlackRock have constructed to better understand how Collective Pensions (aka CDC) work. They are all off this link.

But I’ve chopped up the big one into little ones so that you can digest a little easier.

What does the infographic tell those wishing to participate in a collective pension?

First up a simple explanation of how it works. This slide is aimed at people who understand three terms , risk pooling being central, fixed contributions as in Defined Contribution  and a Lifetime income what you get from Defined Benefit. I don’t think this is aimed at ordinary people but to CFOs , CEOs and HRDs of large private companies.

What should an employer consider when looking at examples of Collective Pensions?

The infographic moves on to two major beneficiaries of Collective (CDC) Pensions. I can only suppose “consideration” is a clever word for what ordinary people would call “what to look out for in a Scheme“. Alternatively “what to judge the scheme by“.

One union has described the advantage to employer and to member as equivalent to a 3% pay rise – at no extra cost to bosses or tax to the member of staff.

What does this benefit to members looked through an actuary’s spectacles?

Here are the figures introduced to us firstly by large actuarial consultancies (to no comment) and by the Department of Work and Pensions (to a lot of comment). It’s the amount you’d improve Defined Contribution if DC was still  offering money to purchase an annuity. The controversy is if that is still a sensible comparator when it hasn’t been decided what DC Guided Retirement could offer.

How does this movement to collective pensions look like from a macro economic viewpoint?

We leave the UK to travel to European countries who use collective pensions as the main way of providing second pensions.

What diversity in design is there in  each country’s collective pension system?

Who’s looking abroad for inspiration for the UK?

There are a cluster of countries (which the Pensions Commission has been studying and visiting for ideas to make private pensions more adequate for ordinary people’s retirement). All three countries are using collective pensions to provide a retirement wage rather than a pot of wealth.

How can participating employers make CDC work for them?

This explains the bottom line for employers reviewing workplace pension choices. Firstly whether to switch from DC to CDC ;  secondly which  collective pension scheme to participate in.

Large employers are now used to taking these decisions, it is what they have done when establishing workplace pensions to meet the requirement to auto-enrol. What is new is the return to an order of things that looks much more 20th century than 21st century. Much more Danish and Dutch. A wage in retirement not a pot of money to be spent (or not spent)  as a saver chooses.

Thanks BlackRock.

I think you have just produced the first buying guide as an infographic. Potential participants in a collective pension should find it useful.