The level of calm within a given pensions department ahead of the advent of the new pension freedoms is probably related to how well you know your scheme membership.
And, of course, how well your scheme members understand their retirement entitlements. Many of the first swathe of retirees will have some legacy defined benefit provision with a nice topping of defined contribution.
In the short term, that makes the forecasting a little more straightforward: as the wardens of The Caravan Club and savers in Nest come to retirement over the next couple of years, cash is a very likely option.
This will be the case for many others, taking an income from their DB entitlements with a little at-retirement bump, or at-age-65 bump, from their DC pot. Indeed, this suits the first curve of the U-shaped retirement: a little bit more spend at the start, when a person can make use of it.
Illustration by Ben Jennings
It does, however, mean that much of the early data on scheme member behaviour will be misleading to use for the younger generation of first-time workplace savers.
If many opt for cash in April it could be a false basis upon which to design the default fund for people like your correspondent, who will only have DC provision to rely on.
Elsewhere at our event last week, there was an interesting discussion of the investment risk to which those same younger DC members should be exposed.
Alan Lakin, assistant pension manager at Philips Electronics UK, put his hand up in favour of being heavily in equities at a young age, and staying in them for longer.
“If you are looking at a drawdown situation then there is no point getting to a situation where you’ve got fixed interest and cash when you get to age 65 because that is not going to sustain you for another 30 years,” he said.
“I don’t see why people shouldn’t be quite heavily in equities into their 50s and 60s, because we are going to need to sustain capital growth to provide income throughout retirement.”
Cash may be crowned in April, but the probable length of its DC reign is another matter.
Ian Smith is editor of Pensions Expert. You can follow him on Twitter @iankmsmith and the team @pensions_expert.
