I do agree. When I mentioned moving defined-benefits schemes into CDC, I was responding to the Minister’s response to me about large CDC schemes starting. I was expressing concern that if I were in a DB scheme, I would not fancy that change in my situation. It is an interesting question. When relatively small employers start creating new pension schemes in 2016, I imagine that trying to create a collective one may be a little ambitious for them. I wonder whether the ideal situation would be to have industry-wide schemes, or ways of aggregating schemes, so that people would have the chance, through their employer, to sign up to a collective scheme that was not the employer’s own. The idea of the proposal is to ensure that employers are not on the hook for anything other than their annual contributions, so it would strike me as a great opportunity for them.
Before any of the schemes can register and start inviting members and signing up employees, I suspect that we need the regulator to implement a framework to make clear the requirements for communication, scheme rules, quality standards and management. Otherwise, we may end up with some pretty bad collective schemes, run by people who do not know what they are doing. If that happened, some members might end up in collective schemes that had huge downsides, when they did not really want to do that and did not understand what they were doing. They could find themselves with a large amount of their savings trapped in such schemes.
I do not want us to have a mis-selling nightmare in 10 years’ time where people who are in these schemes are all underwater and will never receive what they were aiming for, and companies have to start worrying about paying out to people who have already retired with certain promises. If we get the system right at the start, it could be really powerful, but if we get it wrong, we could end up with the next mis-selling nightmare.