What's Happening?
Hymans Robertson, a leading pensions and financial services consultancy, has released a report highlighting a strong appetite among pension savers and employers for collective defined contribution (CDC) schemes. The report suggests that CDC could transform
retirement outcomes in the UK by offering better value and improving pension adequacy. The study calls for government and industry leaders to support diverse CDC models, ensuring they are scalable and inclusive. Paul Waters, head of DC markets at Hymans Robertson, emphasized the importance of CDC as a meaningful opportunity to enhance retirement outcomes for millions. The report advocates for a diverse ecosystem of CDC designs to cater to different needs, including multi-employer schemes.
Why It's Important?
The push for CDC schemes is significant as it addresses pension inadequacy, a pressing issue in the UK. By offering a risk-sharing model, CDC can provide better retirement outcomes without placing undue burdens on employers. The government's support for multi-employer CDC schemes is seen as a positive step, but further commitment and leadership are needed to boost confidence among savers. If implemented effectively, CDC could become a cornerstone of UK pension provision, strengthening the social contract between generations and ensuring a fair and resilient system.
What's Next?
The report urges the industry to prioritize CDC as part of a broader strategy to tackle pension inadequacy. The government is expected to play a crucial role in promoting and providing support for CDC schemes. Industry leaders are encouraged to engage in the development of diverse CDC models to ensure they are adaptable to various needs. The success of CDC will depend on thoughtful design, transparent communication, and collaborative delivery.
