As part of this process mechanisms should be introduced at outset to ensure that quotations are accurate and not misleading. “Since there are no guarantees in CDC any benefit illustrations need to be very carefully annotated with the assumptions used. Ideally a standard calculation method for future illustrations should be developed, perhaps to be used alongside some previous history data in comparison. The truth, the whole truth and nothing but the truth would be a good place to start!”, said John Flynn.

AMNT strongly supports the proposal that CDCs—albeit only in retirement—are made available to individuals whose pension accrual has been in DC schemes. These members stand to gain from the investment and longevity risk pooling that CDC provides, as well as from the reassurance of not having to manage their retirement funds personally throughout their later years.

However, although CDC will be a suitable option for many people, some individuals may prefer alternative approaches—whether to achieve complete certainty through an annuity or to pursue a bespoke solution for personal reasons. It is therefore important that enrolment into CDC includes the ability to opt out at the outset.

Promotion and marketing that is part of a guided retirement process to a cohort of members needs to be carefully managed to ensure it explains all the risks (and benefits) and comparisons with alternative pathways to allow them to decide whether to opt out. Additionally any claims for pension targets or investment returns compared to other products need to be carefully scrutinised. AMNT suggests that an independent body, such as MaPS could produce material explaining CDC and r-CDC independently of providers that could be shared with sponsors and potentially the wider public to offer an explanation outside the concept of marketing and promotion.

Finally, AMNT highlights that individuals who have already retired and made independent arrangements, as well as groups such as the self-employed, would be unable to access the product at this stage. The Association therefore hope that a subsequent retail phase will be developed as soon as possible to accommodate these groups.