PPI's Collective Pensions with Investment Choice: Making CDC work for the UK

Commenting on the release of the paper, Collective Pensions with Investment Choice: Making CDC work for the UK, Paul Waters, Head of DC Markets, Hymans Robertson, says:

“We welcome today’s paper, released by the PPI and the in-depth analysis that has been completed. In particular, the exploration of alternative retirement risk sharing designs that are going through CDC regulation at the moment.

“Risk sharing in retirement can deliver better member outcomes than DC in many ways. PPI’s research shows an alternative design construct to CDC. They note the potential for it to deliver higher retirement income and cite simplicity as a key feature. We agree these are important goals.

“However, the idea that members retaining flexibility to manage their own investments in retirement to match their risk appetite is not a feature we think is universally better. A “do it for me” approach where investments are pooled in a CDC scheme and managed by the Trustee will be preferred by many.

“Our expectation is that the greatest benefit from risk sharing for DC members can be achieved by the industry first delivering on the multi-employer whole of life and retirement only CDC designs that are underway. 

“With further innovation along the lines of the ideas in today’s PPI paper, and other solutions we see in development for the market, following. Whatever the design construct used, achieving scale from these new retirement products will be very important to deliver the benefits for members.”

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