Proposed CDC scheme

[fishtank]

The problem with shared risk between active members and retired members is that only one side has any choices. If RM increases contributions there is a cap on what you could increase those to before members start walking away from the scheme. If the combined contributions for the CDC scheme are 19.6% and the combined contributions for the IDC are 16% that gives very little wiggle room before the IDC scheme starts to look like a better investment.

That leaves pensioners to bear the brunt of any funding issues and there is no cap on the level a CDC pension could drop to. The Hilary Salts video is next to useless and tells us nothing.

[jetblack]

You go for a job that pays £10k a year .
At the interview it turns out that your gross pay will actually be circa £8k. The rest will be invested for your retirement.
You will have no say in how that deferred income will be invested.
Furthermore, there are no guarantees (by those doing the investment on your behalf) of what your retirement income might be.

Would you take the job ?
Would you say "no - pay me the £10k thanks" ?
Would you say "I have no issue with taking the £2k hit to my income - but I want to say where the money goes" ?
Would you say "If you are taking the £2k and making decisions on my behalf (and so taking a percentage yourselves for the privilege) I want an assurance that I'll receive X amount upon retirement" ?

Or, would you say, as is being recommended to us that we say, " Yes sir - that will do nicely" ??

[TheRealDeal]

It is such a complicated issue with pensions these days. Am I right in saying that older RM workers have at least three pensions? Two being frozen but still earning interest and one current that is about to close?

I have 30 years service and have my NRA60 which relates to service from staring in 1987 to 2010. Then I have my NRA65 which is from 2010 to 2018 and closure to future accrual.

And assets from that current scheme would be transferred into the new improved DC scheme (under the original Apr 2017 offer)?

Why would they be? The pensions that members of the RMPP have accrued over the years still need to be paid out.

Either way we have a choice not to contribute into the CDC scheme?

Yes. But the first choice is do we contribute to the DBCB scheme or not!

Thanks Robert.

[heapsy]

Your pension wouldn't fall....What is being said, is that IF the returns from investment on the stock markets were to struggle, then your pension could fall for a period.

It could well fall. My money is on it falling short of 'targets' medium to long term. Of course, if the 'targets' are set (artificially) low, then they shouldn't be too hard to attain - so I could be wrong in that respect. But you'll be stuffed in retirement if targets are set low, if you see what I mean. But hey,at least someone somewhere will be able to say that they've met targets.
Cost averaging doesn't really enter into it here - whats important about this deal is that you are assured of absolutely nothing in retirement - and you have little say in how your money is invested for you. You are, for want of a better way of putting it, over the barrel.

Forget about taking responsible action towards planning for your own retirement with this option. You really won't have much upon which to base your plans. Unless of course you have some kind of second sight into stock markets/bond markets/central bank monetary policy/future political climate/how your pension money is actually being invested on your behalf etc etc. Which no-one does. So - you have, effectively, been financially neutered - you (we) have been financially disenfranchised. Someone else is sovereign over what little wealth we have been able to amass.

Its rubbish. We've been had.

What I actually said, if you read my post properly, was that it wouldn't fall from month to month. In other words it would probably be on a periodical basis.

[jetblack]

TLDR: the CD/CB/BBC/CBI scheme may or may not fall.

As opposed to, for eg., a defined benefit guaranteed in perpetuity upon retirement, which currently is the type of pension scheme that most of us are members of.

[stephen500]

I would love to delete this post, but can't see how!

[TrueBlueTerrier]

I would love to delete this post, but can't see how!

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