Pensions Minister, Torsten Bell, has confirmed that legislation to enable retirement collective defined contribution (CDC) schemes will be brought forward later this year, as part of the government’s wider pensions reform agenda.

Speaking about the next phase of CDC development, Bell said the government intended to introduce decumulation CDC provision “later this year”, extending the model beyond accumulation to provide collective income solutions in retirement.

The move forms part of the Department for Work and Pensions’ (DWP) ongoing work to expand the CDC framework and broaden the retirement options available to defined contribution (DC) savers.

Bell has previously argued that CDC could help address some of the challenges facing individuals approaching retirement, noting that too many people were currently required to navigate complex choices and manage risks alone.

Retirement CDC schemes would allow individuals to pool their DC pension pots at retirement into a collective fund, from which a targeted income would be paid for life.

Unlike annuities, benefits would not be guaranteed, but pooling longevity and investment risks is intended to support more stable and potentially higher retirement incomes.

The government has been exploring retirement-only CDC arrangements as the third phase of its CDC policy programme, following legislation enabling single-employer schemes and the expansion to multi-employer CDC schemes.

In October 2025, the DWP launched a consultation on the design and regulatory framework for retirement CDC schemes, examining how they could operate in practice and how they might interact with wider decumulation reforms.

The consultation highlighted the potential for retirement CDC to provide an alternative to traditional drawdown or annuity products by offering members a collective income for life while targeting benefit increases over time.

Under the proposed model, retirement CDC schemes would operate as trust-based arrangements and could potentially be established as sections within master trusts or other authorised CDC structures.

The development of retirement CDC also links to the government’s broader “guided retirement” proposals in the Pension Schemes Bill, which would require schemes to offer default pension benefit solutions that provide a regular income in retirement.

Industry interest in CDC has grown gradually since the UK’s first scheme - the Royal Mail Collective Pension Plan - was authorised, with policymakers increasingly viewing the model as a potential way to improve retirement outcomes in the predominantly DC workplace pensions market.

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