Prospects for new type of pension chewed over

The Pension schemes Bill, which is completing its progress through Parliament, will open the door to pensions that offer different levels of certainty in retirement, and different ways of sharing or pooling risk. The best-known of these is the Collective Defined Contribution Scheme (CDC).

A TUC Pension Conference held in January underlined just how far away we are from knowing when CDC schemes will come into operation, what their role will be and how much enthusiasm there was for further change. TUC head of campaigns Nigel Stanley was sceptical that many employers would want to offer a scheme. It may fall to union trustees to be the strongest advocates for CDC in the UK.

The success of CDC in other countries is often cited, but some speakers at the conference underlined just how different circumstances are in other countries.

In Canada, staff were able to transfer existing defined benefit (DB) rights into a CDC scheme, whereas in the UK the switch from DB to defined contribution (DC) has already largely taken place. Meanwhile, in the Netherlands, participation is mandatory and there is a commitment to industry-wide schemes, a collective approach and “cross-subsidisation”.

In the UK, a good CDC scheme could provide a means for people to de-cumulate their pensions (convert money saved into an income for life) or aggregate different pension pots as they move from job to job.

https://www.tuc.org.uk/economic-issues/pensions-and-retirement/past-and-future-events/abc-cdc-tuc-pensions-conference-21st