The first single-employer collective defined contribution (CDC) pension scheme is authorised and ready to launch in 2024 for the Royal Mail.

Next steps are likely to include expansion into the multi-employer market as a competitor to individual defined contribution schemes; to provide a pension scheme that delivers an income in retirement, and offers potentially higher value for contributions.

Immediately there may be unfairness in access for employees; CDC schemes will only be available at an employer’s discretion.

The inequality of the defined benefit or contribution dichotomy is likely to be played out across a third field.

Even amongst savers with access to schemes, there will be those who stand to benefit to a greater extent than other members.

It is important to not only consider the expected benefit, but also the variability of outcomes, particularly in the context of the member’s risk appetite and capacity for loss.

Time horizons, the accuracy of underwriting, and valuing benefits will all have a bearing on outcomes. Within a CDC scheme, members may profit from the relative misfortune of the other scheme members.

Some members will be lucky, others unlucky, and a number may be able to make their own luck.

With the underwriting of that luck being passed to other members, paternalistic employers will need to be comfortable about those with whom they enter into a scheme.

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