purchase issue, where if you are not going to purchase an annuity you are in the wrong place. Ensuring that you spend some governance time on those members, as well as the rest of the journey, is important. It is all proportionate that depending on what your membership looks like. Smaller schemes strug- gle with that a lot more. We have talked about the E, S and G. It is great that you can look at the whole thing but pinpointing the climate issue with measurable carbon is an easy way for small schemes to get started on the journey. Hopefully, that will pan out into the S and the G over time, but master trusts should be looking at the whole thing.
What is happening with Collective Defined Contribution (CDC) schemes? Smart: We are ready to look at our first CDC application. Hope- fully, that will come soon. The CDC regulations have been drafted with a single-employer scheme in mind. Multi-employ- er CDC schemes are more challenging. They need a little more work to understand what the regime looks like, but there is a demand for them, not least from master trusts. Smith: The potential for CDC is there. A lot of the issues we have talked about today are around asking members to make choices and get engaged. It feels like we are still in a retail-driven world where individuals are asked to look after themselves, rather than us collectively helping them on their journey. I do not know if some of the engagement issues we have talked
about today could be solved through some form of collective activity. There could be something there to make people’s jour- ney easier and share some of those risks. It is a debate we need to have. Delo: I worry about DC in retirement. As a pensioner gets fur- ther into retirement, they still have to keep making decisions on what they are going to drawdown. Whereas in a DB scheme, your pension is paid out every month without any personal action so you do not have to worry. It is pretty important that decumulation is low intervention from the pensioner’s point of view. Something that does that would be welcome, but I have not yet had a single serious con- versation about launching CDC. Bucksey: The horse has bolted. We are a different society to Holland, for example, which is flirting with CDC. We are not seeing any demand for it from employers or consultants. In the retirement space, we are innovating with a four-pot product. Fundamentally, people do not like giving their money away and never seeing it again. That is what killed annuities. Segars: If you ask people what they want, they want a guaran- teed income for life that goes up with inflation. What does that sound like? Humble: We’re finding that many people also value flexibility and often want to retain the ability to change their choices. Segars: It has gone from one extreme to another. There is pos- sibly scope for it to swing back. Most of our members are tak-
If you ask people what they want, they want a guaranteed income for life that goes up with inflation. What does that
sound like? Joanne Segars, Now Pensions
20 November 2022 portfolio institutional roundtable: Defined contribution
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