It’s good of William Bourne to continue to do this work on the LGPS funds. I trust it- he’s a good man!

This is a good indication of the kind of fund performance we might expect from CDC, except we’ll be a lot better than this when growth markets have been good (as they have these last five years).  When time’s are difficult we’d expect returns from our growth targeting strategy to be lower than LGPS’ more defensive position.

So the 7% being averaged after fees looks what we’d what we’d expect long term. It’s a lot more than inflation but an awful lot less than the 14% that you’d have got (gross of fees) in the FTSE All-World Index.

Overall we think that CDC investment performance should be net of fees around 8% over time. We’d target inflation +5% . but I’m a simple man and think of inflation as on average 3%.

There will be a lot more volatility in a CDC growth fund, especially in the early years but in time we see some matching in the fund to meet pensions in payment which will draw it toward a multi-employer DB scheme like LGPS. We will struggle to get the buying power of LGPS or USS or Railpen but that’s what we’d aspire to.

In my view, the lack of guarantees will mean that CDC collectives (rather than DB ones) will have an advantage over time. The price that pensioners will have to pay for mor over time is less stability of income in the short term.

Thank you William Bourne for this useful information. We hear too little about the performance of collective pensions over time.