Examination of Witnesses

Part of Pension Schemes Bill – in a Public Bill Committee at 11:31 am on 23rd October 2014.

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Tim Sharp: We think it is fundamentally inefficient. You have got lots of little pots of money that are being invested. You have efficiencies through having one big pot of money. I think that feeds through to the investment choices that can be made. When you have collective schemes with lots of members, you can invest in a broader range of diversified assets and, hopefully, have a smoother growth in the pot.

The final part of it is around the retirement income. CDC provides the ability to share longevity risk across a big cohort of people, rather than the expensive process of either draw-down or buying an individual annuity, which you would have to do under an individual DC.