Collective Defined Contribution Pensions - Consultation completed

[Steve_2]

Thought I’d post this link https://www.gov.uk/government/consultations/delivering-collective-defined-contribution-pension-schemes
No idea if Jacobs is thinking if this as a solution. Either as a transfer option (with financial advice) or an enforced change from DB to CDC.

[John Ratsey]

Thanks for the link. I note considerable discussion of risk-sharing in the consultation, presumably to protect those who made poor investment decisions (or the managers took all the money in admin costs).

It wouldn't be easy to shift out of defined benefit into defined contribution.
One of the shortcomings of many defined benefit schemes is that they have a lot of their money invested in bonds or similar "safe" (but low yielding) investments so there's certainty about having enough money to pay the next 10 years or so of pensions. And, as in the case of HPS, the scheme was underfunded then it doesn't leave a good share of the assets available to be invested for growth.

If I were putting money into a defined contribution scheme then I would be looking for capital growth (which tends to be associated with more risk) and would only consider locking in some of that growth when getting close to drawing the pension.

[Steve_2]

The advantage of collective dc is that pools funds remain invested, like a drawdown, so more risk can be taken. My concern is that once these CDC’s become multi employer, Halcrow might see this as an easy option to switch the DB to a Target based CDC. As a cheaper option than securing buyout

[philjohnson]

Steve - Such ideas for these collective pension schemes are only under consideration at the moment. We heard about these at the latest OPA meeting that I and Jon Bateman attended on behalf of HPA. There is therefore no suggestion that Jacobs, HGL or the Trustee have anything to consider. From what we heard, there are going to be lots of issues to sort out so I suspect they are a number of years away from evening becoming a reality