Social housing professionals are broadly supportive of the idea of collective defined contribution (CDC) pensions, research by First Actuarial has found, with a "clear" preference for multi-employer CDC options.

The polling found that almost half (45 per cent) of social housing professionals feel their workforce lacks engagement with pensions, while 40 per cent believe their senior management is neither engaged nor disengaged with pensions, highlighting a level of indifference at leadership levels.

However, First Actuarial suggested that collective defined contribution (CDC) pensions, which provide a 'middle ground' between defined benefit (DB) and DC for employers, could be an effective way to improve retirement outcomes even without this engagement.

In particular, the company said that CDC schemes could help strengthen pension outcomes, as they provide scheme members with a reliable pension in retirement without the need for members to manage their own investments.

In addition to this, First Actuarial suggested that CDC schemes could help ensure that time-pressed employers are able to focus on their day job, by bringing in specialists to optimise pension arrangements.

First Actuarial head of CDC, Derek Benstead, said the sector’s "collaborative nature", value-driven mission and long-term outlook also make it well suited to CDC.

He said that, for many housing associations currently offering DB career average, or have done so in the past, transitioning to CDC career average could be a natural progression.

There was also support for CDC amongst social housing professionals, which Benstead highlighted as evidence that CDC is of “genuine interest” to social housing employers.

Indeed, First Actuarial's poll revealed that 80 per cent of respondents believe CDC pensions are a good idea and 66 per cent specifically think it will be positive for the housing sector.

According to the poll, the top three perceived benefits ranked by respondents were reliable employer contributions, no effect on the employer accounts, and attractive staff benefits.

There was also an "impressively clear" recognition of the advantages of CDC over DC, as the research found that the group believed in pensions, not pots.

Views on CDC compared to DB were mixed though, with some valuing CDC’s advantages, and others preferring traditional DB benefits.

However, First Actuarial said that this was good to see, emphasising that DB is, and will remain, a valid solution for employers with the will and resources to support it, while CDC offers an appealing alternative for many.

Despite the support for CDC, the polling found that there is "clearly" more appetite in the social housing sector for a multi-employer CDC scheme, which is likely to reflect the significant costs involved in setting up a CDC scheme.

Whilst not currently allowed, the government recently confirmed that it is moving forward with its plans to extend CDC to multi-employer schemes, with legislation set to be laid in parliament in the autumn.

“We simply need to wait for final regulations for multi-employer CDC and authorisation of the first master trust to move forward,” Benstead said.

The report follows the establishment of First Actuarial’s CDC Strategy Group, comprised of 19 social housing representatives, which has been exploring the potential of CDC pension arrangements in social housing. It covers the findings from the first five meetings.

“We’re planning to hold another meeting of the CDC strategy group in September, and we would welcome any additional housing association members," Benstead added.

---