Industry experts have welcomed the government’s consultation on plans to extend collective defined contribution (CDC) to whole-life unconnected multiple employer schemes and other related provisions, hailing this as the “landmark moment” for the industry.

The Department for Work and Pensions (DWP) launched a consultation toady (8 October) on draft legislation that would remove exclusion of unconnected multiple employer CDC schemes from operating under the existing CDC provisions.

The Pensions Regulator (TPR) welcomed the consultation, with chief executive, Nausicaa Delfas, stating: “Multi-employer CDC pension schemes offer the potential to deliver better outcomes for thousands of UK pension savers, turning a pension pot into a retirement income.

"I encourage industry to take part in the consultation and we look forward to working with government to develop an appropriate regulatory regime.”

TPT Retirement Solutions client and strategic partnerships director, Andy O’Regan, also said that the introduction of multi-employer whole-of-life CDC scheme regulations would be a "landmark moment" for UK pensions.

"Previously, CDC schemes had only been viable for the largest employers," he continued. "These new rules will make it possible for all employers to provide their staff with a CDC pension scheme."

And industry appetite is apparent, as O'Regan said that TPT Retirement Solutions has already been speaking to around 200 employers who have expressed interest in how a CDC scheme could be delivered for their employees.

“This consultation will open the door to CDC for all employers regardless of size, with the first multi-employer CDC scheme potentially launching within a couple of years," he stated.

"We believe many employers, pension savers, and the wider economy could benefit from the introduction of these schemes. We look forward to responding to this consultation in due course.”

Aon partner and head of CDC, Chintan Gandhi, agreed, highlighting the long-awaited consultation as the “next big step” for CDC.

“Opening up to multi-employer CDC schemes, including those provided by master trusts, will meet the needs of employers and the self-employed. We believe these have the potential to help over 30 million UK workers build up a pension,” he stated.

However, Gandhi also called for the “swift extension” of The Pension Regulator’s CDC guidance, arguing that this is of equal importance.

“It is only with visibility of the entire regulatory regime that providers can judge whether they can introduce multi-employer whole-life CDC schemes to the masses - and in a way that is commercially viable,” he added.

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