The Royal Society for Arts, Manufactures and Commerce (RSA) has launched a new forum that aims to promote the development of collective defined contribution (CDC) pension schemes in Britain.

It stated that offering the choice of CDC pensions could build a pensions framework that should deliver “better pensions for current and future generations”.

An RSA poll found that 25 per cent of pension professionals were likely or very likely introduce CDC pensions, while a further 28 per cent said it was ‘possible’ they would introduce them within five years.

Just 4 per cent of the respondents said they would prefer to set up their own CDC scheme, with two-thirds preferring a multi-employer option.

The launch was attended by Pensions Minister, Guy Opperman, who welcomed the establishment of the forum and said he was “well aware” of the wide-spread industry support for the introduction of CDC schemes.

Additionally, on Twitter, Opperman noted that the government was starting with the single employer CDC option and that he would be publishing the regulations “within a fortnight or so”.

The government will then turn its attention to multi-employer CDC schemes, according to Opperman, with the process involving “extensive multi-employer engagement” this autumn/winter.

Commenting on the forum launch, Opperman stated: “I truly expect this to be a driver of progress towards greater adoption of CDC pension schemes, especially now the Pension Schemes Act 2021 has received Royal Assent and the primary legislation needed for CDC schemes to operate in Great Britain is in place.”

RSA CDC Forum co-chair, David Pitt-Wilson, added: “With the primary legislation passed, we have the opportunity to build a better architecture for pensions in Britain. To do so will require a consensus about the best way forward — from policy makers, employers, unions, members, regulators and others. That is what the forum aims to do.

“There is a clear need for pensions which offer an ‘income for life’. Every study concludes that CDC offers a 30 per cent plus upside over insured annuities. To realise that outcome will require, debate, discussion and consensus about how best to structure and regulate CDC.

“With 6 per cent of the GDP spent on private pensions, the prize from doing so is enormous. We need to ensure that the benefits and indeed risks of the scheme are widely understood by the pensions industry, large and small employers, as well as potential beneficiaries.”

Share Story: