Pensions Minister, Guy Opperman, has said he is keen to move quickly on plans to extend collective defined contribution (CDC) pension schemes to more savers, with a consultation on a package of prospective design principles expected "later this year".

Speaking at the Royal Society of Arts (RSA) CDC Forum, Opperman suggested that the government should capitalise on industry enthusiasm to extend CDC to other types of pension schemes, calling on the industry for help in making this a reality.

Whilst the regulations coming into force on 1 August 2022 will provide for single and connected employer CDC schemes, some parties have already expressed interest in pursuing multi-employer CDC schemes as an offer for members.

In light of this, the Department for Work and Pensions (DWP) has confirmed its intent to consult on a package of prospective design principles and approaches to accommodate new types of CDC schemes “later this year”.

These design principles aim to bring the potential benefits of CDC to more savers in the UK in an appropriate way, capitalising on the enthusiasm that the industry has shown for innovation in this area.

Pensions Minister, Guy Opperman, commented: “CDC schemes have the potential to transform the UK pensions landscape and deliver better retirement outcomes for millions of pension savers.

“I firmly believe that we should capitalise on the enthusiasm that is building for extending CDC to other types of pension scheme, such as multi-employer schemes and master trusts.

“I am keen to move quickly, but we must get this right if it is to work. That is why I am calling on all those who are seeking to deliver the full benefits of CDC to work with us to help make this a reality.”

RSA CDC Forum co-chairs, David Pitt-Watson and Hari Mann, added: “People who save for a pension typically want to secure an income which will last them until they die, not just to be presented with a cheque when they retire. That is what CDC pensions are designed to do.

“The government is to be congratulated in creating regulations which allow everyone to benefit from well managed CDC plans. The evidence suggests this can transform retirement for millions of people.”

Institute and Faculty of Actuaries, (IFoA) CDC working party chair, Simon Eagle, also welcomed the plans for further development of CDC pension provision, suggesting that this is “only the beginning".

Eagle continued: “What is clear now, is that there are further questions to answer in terms of broadening scheme design and facilitating adoption for willing employers and employees in the UK.

“We see this as only the beginning and are pleased to see the Pensions Minister is keen to move quickly on the introduction of multi-employer and master trust CDC schemes in order to provide wider access to CDC including for employees of smaller organisations.

“We look forward to further DWP consultations on a package of prospective design principles and approaches to accommodate new types of CDC schemes later this year.”

Share Story: