CDC legislation update

[RobertT]

Obviously there are different kinds of investments and some are riskier than others. Bonds for example are often seen as safe havens and they are generally safer than equities, but as they're basically loans they can be defaulted on and therefore aren't risk free.

Realistically CDC has to invest in assets that will provide returns higher than low risk bond funds, otherwise it has no chance of providing the pensions it aims to provide.
If you want decent returns, you have to take at least some risks!

Personally I've saved hard and invested in a healthy percentage of 'return seeking assets', some of which are bonds. Had I saved into the safest options, I would be less well off by a considerable sum of money!

The RMSPS annual reports actually suggest the average member lives longer than the national average!

I can understand some people wanting the flexibility and control of an individual DC scheme and there are plans to be able to take a 'cash transfer' from CDC to DC (pending legislation), which might be a way around that.
It is something I might consider as I only expect to be a member for about 2 years.

But reading some of the posts on this forum aswell as the Facebook version of RMC, it's obvious to me that many people don't even know which scheme they're in let alone how to manage a pot of £thousands to get the best return, and then manage it into their retirement too.

RM workers are going to be guinea pigs with CDC which isn't ideal, but over all, personally I think it's the best we're going to get, and will be better than DC for most people.

And that is of course is just my opinion.

[heapsy]

My honest opinion is that the scheme, one way or another, will run into trouble at some stage and close. I just can't get my head around how RM will meet the investment returns needed for such a scheme. Let's face it, they couldn't or wouldn't make previous schemes work.

[Woody Guthrie]

My honest opinion is that the scheme, one way or another, will run into trouble at some stage and close. I just can't get my head around how RM will meet the investment returns needed for such a scheme. Let's face it, they couldn't or wouldn't make previous schemes work.

I think the biggest danger to the fund might be its isolation, administration costs and how pension freedoms impact on it.

What happened in the Netherlands is that when some of the smaller schemes started to lose members and shrink their administration costs started to have a real impact on the outcomes for members, they were able to offset this only by merging more and more schemes together to create economies of scale.

We're kind of in a different place to that, we're starting with a relatively large scheme but if as Robert suggests there may be an option to bail out into a DC scheme we may see the scheme shrink but who will we merge with?

As I've said before it's all hypotheticals but nobody in the CWU seems willing to discuss the negative hypotheticals only the positive ones. That makes me nervous.

[heapsy]

My honest opinion is that the scheme, one way or another, will run into trouble at some stage and close. I just can't get my head around how RM will meet the investment returns needed for such a scheme. Let's face it, they couldn't or wouldn't make previous schemes work.

I think the biggest danger to the fund might be its isolation, administration costs and how pension freedoms impact on it.

What happened in the Netherlands is that when some of the smaller schemes started to lose members and shrink their administration costs started to have a real impact on the outcomes for members, they were able to offset this only by merging more and more schemes together to create economies of scale.

We're kind of in a different place to that, we're starting with a relatively large scheme but if as Robert suggests there may be an option to bail out into a DC scheme we may see the scheme shrink but who will we merge with?

As I've said before it's all hypotheticals but nobody in the CWU seems willing to discuss the negative hypotheticals only the positive ones. That makes me nervous.

Me too. There's the obvious inter generational risk with such a large scheme. Investment return risks. What about risks associated with changes to numbers of personnel / contracted hours as the business moves to move part time? There may also be risks associated with people bailing out before the NRA, maybe drawing from the pension early.

[k979aaa]

With this shower of shite along time this clown is play acting as a leader of our nation he Boris Johnson is the biggest clown in the history of the once great nation for he can waffle all he wants bumfulff and bluster all he wants. He is more interested in his conformist policy's than our futures and our pensions!

[NWpostie]

With this shower of shite along time this clown is play acting as a leader of our nation he Boris Johnson is the biggest clown in the history of the once great nation for he can waffle all he wants bumfulff and bluster all he wants. He is more interested in his conformist policy's than our futures and our pensions!

To be fair it was Gordon Brown as Chancellor of Exchequer who destroyed our pensions by taxing the surplus of pension schemes in 1997 creating a deficit situation we now find ourselves in.

https://www.telegraph.co.uk/finance/per ... nties.html" onclick="window.open(this.href);return false;

[Woody Guthrie]

With this shower of shite along time this clown is play acting as a leader of our nation he Boris Johnson is the biggest clown in the history of the once great nation for he can waffle all he wants bumfulff and bluster all he wants. He is more interested in his conformist policy's than our futures and our pensions!

To be fair it was Gordon Brown as Chancellor of Exchequer who destroyed our pensions by taxing the surplus of pension schemes in 1997 creating a deficit situation we now find ourselves in.

https://www.telegraph.co.uk/finance/per ... nties.html" onclick="window.open(this.href);return false;

Tory Chancellor Norman Lamont was the first to cut the rate of ACT from 25 to 20 per cent in his 1993 budget but the bottom line was the Dotcom crash did far more damage to Defined Benefit pension funds than any chancellor ever did.

Our pension fund ended up with something like a £12-15 billion deficit mostly down to an increase in life expectancy, poor investment choices, volatile markets and a decision to move into 'safer waters' after 9/11.

What the government took was a pittance compared to that.

[NWpostie]

With this shower of shite along time this clown is play acting as a leader of our nation he Boris Johnson is the biggest clown in the history of the once great nation for he can waffle all he wants bumfulff and bluster all he wants. He is more interested in his conformist policy's than our futures and our pensions!

To be fair it was Gordon Brown as Chancellor of Exchequer who destroyed our pensions by taxing the surplus of pension schemes in 1997 creating a deficit situation we now find ourselves in.

https://www.telegraph.co.uk/finance/per ... nties.html" onclick="window.open(this.href);return false;

Tory Chancellor Norman Lamont was the first to cut the rate of ACT from 25 to 20 per cent in his 1993 budget but the bottom line was the Dotcom crash did far more damage to Defined Benefit pension funds than any chancellor ever did.

Our pension fund ended up with something like a £12-15 billion deficit mostly down to an increase in life expectancy, poor investment choices, volatile markets and a decision to move into 'safer waters' after 9/11.

What the government took was a pittance compared to that.

I'm not disputing that either, for some to say its just Tories doing it conveniently forget for ideological reasons to ignore what Labour did, both did a lot of damage to our pension scheme.

[heapsy]

Gordon Brown also started taxing the dividends generated by the shares held within the FS pension schemes. And Labour tout themselves as a party for the people.

[k979aaa]

Gordon Brown also started taxing the dividends generated by the shares held within the FS pension schemes. And Labour tout themselves as a party for the people.

No none of them have our interests at heart they are on the gravy train to a career in politics and with that mix with foreign agents and exiles (tax dodgers in their own lands). The magic money tree the tree the keeps on giving and after you have no power you get to be knighted and make the laws of the land!

[Woody Guthrie]

Gordon Brown also started taxing the dividends generated by the shares held within the FS pension schemes. And Labour tout themselves as a party for the people.

To be fair he didn't start taxing the dividends, they were always subject to tax but there was tax relief of up to 20% available (25% pre 1993).

To be fair again if you think of share dividends and tax relief you don't necessarily think of them as a thing for "the people".

Of course that's ignoring the fact that pension funds do rely on dividends to increase returns but the removal of tax relief should not and did not lead to the collapse of defined benefits pension funds.

Pension funds paid out far more in fees to fund managers than they ever did to government even when they were performing badly.

In the case of RMPP and its predecessor the fund was managed poorly for years.

[heapsy]

So it probably means the same will happen again. I'm hoping the new scheme doesn't come in. I don't trust RM or the CWU on this.

[Woody Guthrie]

So it probably means the same will happen again. I'm hoping the new scheme doesn't come in. I don't trust RM or the CWU on this.

I'll be honest with you heapsy, I think occupational pensions are a busted flush as far as providing an income that you can live on after retirement in the long term, certainly for those at the bottom.

Automation of everything from factory work to driving a vehicle will remove so many work hours from the economy that the average full-time working week will have to reduce to somewhere around 30hrs in order to sustain enough jobs but individual employers will have massively reduced headcounts. How can an occupational pension be sustainable under those circumstances?

Someone smarter than me will have to square that circle but one possible scenario might be a higher state pension but one that you actively contribute towards. Something like a return to SERPs but with a higher contribution rate.

At the moment the true value of occupational pensions as a percentage of pension income is plummeting, already the feeling has changed from the position in the 70s and 80s that you could live off your pension to one where it's only part of what needs to be a mix of different solutions that you need to be thinking about as early as maybe 30.

In 20 years time it might be an even smaller part of that equation especially if you've had 10 different jobs in that time as seems to be the trend now.

[RobertT]

Occupational pensions are any type of pension that's provided by an employer, whether it be DB, DC or CDC. And it's true that the best type, DB, are virtually an extinct species, particularly for new entrants and increasingly for existing members too. As we at RM have personal experience of.

Overall occupational pension schemes have actually been on the up in terms of membership, which is down to auto-enrolment, but the vast majority are DC. So obviously don't provide that 'gold plated' index linked income for life that a DB scheme does.

We will have to wait and see whether CDC turns out to be the answer to squaring that circle or not. Personally I think it's got potential and I'd like to see it work, but am not convinced it'll stand the test of time and be taken up by many other companies, particularly as they can just take the easy option of DC.

Bringing back a version of SERPS isn't a bad idea, but ultimately it'll have to be paid for by someone and that liability will fall on the taxpayers of the UK. And would probably benefit the higher paid more and be seen by the working class as another tax.

We're well down the road of a work until you drop scenario in this country, unless the individual does something about themselves. But when you consider the increase in part time jobs, childcare costs, rent, mortgage, etc most don't even think about their retirement until their 50's.

Personally i think every child in the country should be made to put their pocket money into a pension from the age of 5! Get them into the habit early on in life.

[Janet Brum]

RM gets credit for pushing through the CDC pension: https://www.express.co.uk/finance/perso ... ns-popular" onclick="window.open(this.href);return false;