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Philip Hammond silent over CDC pensions in budget speech

01 Nov 2018, 04:47

https://www.express.co.uk/news/uk/10380 ... on-schemes

Philip Hammond remained noticeably silent on changes to workers’ pensions which were expected to be announced today, as the Chancellor delivered his Budget speech with no reference to Dutch-style pension schemes.

Mr Hammond was expected to launch a consultation on collective defined contribution schemes, also known as Dutch-style pension schemes, with one MP hailing the anticipated move as a “huge change coming to the UK pension landscape”.

Under Dutch-style pension schemes, groups of workers pay into a single plan which can lead to reduced risk and bigger payments.
Collective defined contribution schemes give a target amount to workers that the pension will pay out, although this is not guaranteed.
The approach is seen as being halfway between defined benefit schemes and defined contribution schemes, which the majority of workers are now signed up to.

Defined contribution schemes are more risky for employees, while defined benefit schemes guarantee workers a set income when they retire.
But defined benefit schemes have left companies with massive deficits, meaning they are rarely used these days.

It comes as Royal Mail reached a deal with the Communication Workers Union (CWU) over moving their workers to the new scheme.

Speaking earlier this month, Frank Field, chairman of the Work and Pensions select committee, said: “This is a great response and a great news story for everyone, a real win-win situation. I applaud the Government for the approach it is taking.

“The historic deal struck between Royal Mail and CWU, combined with the Government’s ready willingness to make CDC pensions a reality, mean a huge change is coming to the UK pensions landscape, offering a new and different kind of ‘pension choice’.”

And pensions minister Guy Opperman said: “My belief is that we are in a very good place to get pensions legislation in the summer of next year, and much of the work I am doing is to ensure that happens.”

However, Mr Hammond’s Budget does include changes for pensions such as pension boosts for the self employed and its new ‘Pension Dashboards’.

The document said: “The government is taking steps to support the launch of Pensions Dashboards, innovative tools that will for the first time allow an individual to see their pension pots, including their State Pension, in one place.”

It comes as Mr Hammond used his Budget to vow that austerity was ending, promising a “brighter future” as he addressed ministers this afternoon.

Measures introduced in the Budget included £1 billion extra funding for the MOD, an increase to the personal allowance and additional funding for the NHS.

Philip Hammond silent over CDC pensions in budget speech

01 Nov 2018, 13:25

It won't happening any time soon. Maybe in 20 years or so. :arrrghhh

Philip Hammond silent over CDC pensions in budget speech

04 Nov 2018, 14:52

Navalron wrote:It won't happening any time soon. Maybe in 20 years or so. :arrrghhh

It's not happening yes

Philip Hammond silent over CDC pensions in budget speech

04 Nov 2018, 15:04

I'm not really sure whether it needed to be mentioned in the budget for the consultation period to happen. As it has already been reported that it would start 'in the autumn'. Details here.

Assuming the consultation period does start soon and the government says yes, which I'm not convinced they will, the earliest we will see a RM CDC scheme in operation is likely to be 2020, or perhaps 2021 is more realistic.

Philip Hammond silent over CDC pensions in budget speech

04 Nov 2018, 15:50

I'm not sure it actually will happen. If it doesn't, the CWU will have egg all over their faces. I'm genuinely concerned about Rms approach to investing. They are too cautious for me.

Philip Hammond silent over CDC pensions in budget speech

04 Nov 2018, 16:39

heapsy wrote:I'm not sure it actually will happen. If it doesn't, the CWU will have egg all over their faces.

As it's been a joint thing with RM, then they both will.

There is something in the agreement saying something along the lines of: If CDC doesn't look like happening within a reasonable amount of time, then they'll look again at the pension issue.

I'm genuinely concerned about Rms approach to investing. They are too cautious for me.

One of the points of CDC is that it's supposed to be more adventurous, investing in equities rather than the bonds & gilts of more recent times.

Philip Hammond silent over CDC pensions in budget speech

05 Nov 2018, 08:11

RobertT wrote:https://www.express.co.uk/news/uk/1038011/budget-2018-philip-hammond-pensions-collective-defined-contribution-schemes

Philip Hammond remained noticeably silent on changes to workers’ pensions which were expected to be announced today, as the Chancellor delivered his Budget speech with no reference to Dutch-style pension schemes.

Mr Hammond was expected to launch a consultation on collective defined contribution schemes, also known as Dutch-style pension schemes, with one MP hailing the anticipated move as a “huge change coming to the UK pension landscape”.

Under Dutch-style pension schemes, groups of workers pay into a single plan which can lead to reduced risk and bigger payments.
Collective defined contribution schemes give a target amount to workers that the pension will pay out, although this is not guaranteed.
The approach is seen as being halfway between defined benefit schemes and defined contribution schemes, which the majority of workers are now signed up to.

Defined contribution schemes are more risky for employees, while defined benefit schemes guarantee workers a set income when they retire.
But defined benefit schemes have left companies with massive deficits, meaning they are rarely used these days.

It comes as Royal Mail reached a deal with the Communication Workers Union (CWU) over moving their workers to the new scheme.

Speaking earlier this month, Frank Field, chairman of the Work and Pensions select committee, said: “This is a great response and a great news story for everyone, a real win-win situation. I applaud the Government for the approach it is taking.

“The historic deal struck between Royal Mail and CWU, combined with the Government’s ready willingness to make CDC pensions a reality, mean a huge change is coming to the UK pensions landscape, offering a new and different kind of ‘pension choice’.”

And pensions minister Guy Opperman said: “My belief is that we are in a very good place to get pensions legislation in the summer of next year, and much of the work I am doing is to ensure that happens.”

However, Mr Hammond’s Budget does include changes for pensions such as pension boosts for the self employed and its new ‘Pension Dashboards’.

The document said: “The government is taking steps to support the launch of Pensions Dashboards, innovative tools that will for the first time allow an individual to see their pension pots, including their State Pension, in one place.”

It comes as Mr Hammond used his Budget to vow that austerity was ending, promising a “brighter future” as he addressed ministers this afternoon.

Measures introduced in the Budget included £1 billion extra funding for the MOD, an increase to the personal allowance and additional funding for the NHS.

Personally for me it would be beneficial if it dragged on for two more years. With just two years to go, building up an extra lump sum, would be good for me. I don't see the point in another pension for that small time window. However long term a pension must be good for the majority of staff. A lump sum, is just that and once taken, does not increase with inflation. So I hope postmen and women get their CDC pension, although I would love it, if a opt out was allowed for those with little service to go. So we can build up our lump sums further.

Philip Hammond silent over CDC pensions in budget speech

05 Nov 2018, 16:00

stephen500 wrote:I would love it, if a opt out was allowed for those with little service to go. So we can build up our lump sums further.

The question of whether we can carry on paying into the DBCBS when the CDC pension comes in (assuming it does) is covered in the CDC Q&A's which are on myroyalmail. The important bit being this:

Is there an option to remain in the DBCBS after the CDC scheme is introduced?

No. The DBCBS is a transitional arrangement that we are have put in place while we seek the necessary legislative and regulatory changes to enable a CDC scheme to be introduced. Assuming the necessary regulatory and legislative changes are made, the intention is that once the new arrangements are set up, members of the RMPP and RMDCP would automatically join the CDC scheme.


But you have the option of using AVC's to increase your lump sum!

Philip Hammond silent over CDC pensions in budget speech

06 Nov 2018, 08:00

RobertT wrote:
stephen500 wrote:I would love it, if a opt out was allowed for those with little service to go. So we can build up our lump sums further.

The question of whether we can carry on paying into the DBCBS when the CDC pension comes in (assuming it does) is covered in the CDC Q&A's which are on myroyalmail. The important bit being this:

Is there an option to remain in the DBCBS after the CDC scheme is introduced?

No. The DBCBS is a transitional arrangement that we are have put in place while we seek the necessary legislative and regulatory changes to enable a CDC scheme to be introduced. Assuming the necessary regulatory and legislative changes are made, the intention is that once the new arrangements are set up, members of the RMPP and RMDCP would automatically join the CDC scheme.


But you have the option of using AVC's to increase your lump sum!

Well I hope the transition lasts for at least another year. Not sure I can be bothered with 2 years of a new scheme.

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