September 2021
23Sep

CDCs could be the new annuities, say regulators

Collective defined contribution schemes could become a popular alternative to annuities if their risks can be contained, according to the Pensions Regulator and Financial Conduct Authority. Speaking at a Work and Pensions Committee hearing this morning, David Fairs, executive director at The Pensions Regulator, said CDC schemes had many advantages over defined contribution schemes and in future could be rolled out to multiple employers and master trusts, hence become the new pension product of choice for many. CDCs are a half-way...

September 23, 2021
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02Sep

UK. Draft CDC regulations hampered by poor definitions, industry warns

The government’s consultation into draft regulations governing collective defined contribution schemes requires more work on definitions if these pension funds are to be properly implemented, with the Pensions and Lifetime Savings Association warning it could create a “back door” for unscrupulous employers. In a CDC scheme, contribution rates for employers and employees are set in advance, and members pool investment and longevity risk. These pension funds provide income in retirement, though the rate of increase varies and pension reductions are...

September 2, 2021
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August 2021
30Aug

UK. Govt encouraged to make CDC pensions more flexible to improve take-up

The government should make the framework for collective defined contribution (CDC) schemes more flexible to encourage take-up and make it fairer for younger members, according to LCP. The firm’s response to the government consultation on CDC regulations said further flexibility was needed due to the framework having been drafted with the Royal Mail scheme in mind, leaving sponsors who may wish to explore different benefit structures facing limited options. Read also UK’s biggest pension scheme set to screen investments based on...

August 30, 2021
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27Aug

UK. Do CDCs offer the best of both?

The DWP recently launched its consultation on draft collective defined contribution pensions scheme regulations, which is due to close on 31 August. Once these regulations are firmed up, by the end of this year in all probability, single or connected employers will be able to open collective defined contribution schemes for their employees. The Royal Mail, in a show of unity between employer and trades union, will be the first to do so. We will have to wait until early...

August 27, 2021
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July 2021
23Jul

UK. Can CDCs solve the pension funding problem?

Defined-benefit (DB) pension schemes have been in decline for years and in most professions younger employees are offered defined-contribution (DC) schemes, which lack many of the former's benefits. But a new option aims to deliver the best of both types of pensions. This week, the government has issued a consultation on draft legislation for Collective Defined Contribution (CDC) Schemes, spurred on by Royal Mail (RMG) which had been lobbying for new legislation to accommodate CDCs since 2018. CDC pensions work by...

July 23, 2021
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