We can all celebrate the fact that collective defined contribution (CDC) has arrived for thousands of Royal Mail workers.

But it’s no good if only a small number of folk (relatively speaking) can benefit from the hard graft which has been done to turn the ambition of CDC into a reality.

In order to truly get the party started, we need to open up its doors to a wider range of individuals and organisations, which means sending out invitations to a much wider audience.

The timing of the most recent call for evidence on decumulation, which dovetails neatly alongside the consultation on CDC, can’t be pure coincidence…

Many of us see real potential for CDC to play an enduring role in UK pensions, possibly for the auto-enrolled generation who thrive on defaults.

Also for DC members with larger pots looking for a solution which pays an income for life in a fuss-free environment. We now need to think about some of the practical questions relating to CDC schemes.

This is exactly why the Pensions and Administration Standards Association (Pasa) set up a group to scratch their heads over what the answers to those questions might involve in real life.

For example, although it’s widely agreed communication for CDC members will be a major challenge, we mustn’t overlook administration too in the rush to develop and launch new products.

Pasa will consider how administration factors could be woven into the new CDC income solutions, to try and avoid unwelcome surprises. Watch this space for more details…

Share Story: