The Department for Work and Pensions (DWP) is looking at the role collective defined contribution (CDC) pensions can play in decumulation, as it considers the next step for CDC.

Speaking at the PLSA Annual Conference DWP head of DC decumulation and CDC policy, Julian Barker, stressed that there are currently issues around how people access their pensions.

“We know that more than half of pensions accessed for the first time are full cash withdrawals and the many reasons for that, but while it is the right thing for some people to do, it won't be appropriate for everyone.

Given this, and the growth of DC pensions, Barker argued that “there's definitely a case for reform”.

“There's definitely a case for making some changes to make DC saving work better,” he said, noting that the government is already looking at some of these issues as part of its pensions review.

In particular, Barker noted that while the first CDC scheme recently launched, “there is still more work to do on the role that CDC could play in the decumulation phase.

“That’s something we are looking at as the next stage,” he confirmed.

He also confirmed that the government is looking to take legislation to extend CDC to multi-employers to parliament next year, after responding to industry feedback on the draft legislation.

The government's consultation on the draft legislation, which would remove the exclusion of unconnected multiple employer CDC schemes from operating under the existing CDC provisions, has been welcomed by the industry, with organisations branding it a "landmark"moment.

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