The Department for Work and Pensions has laid out a path towards member assets being transferred into a proposed Retirement Collective Defined Contribution plans without express consent, in its response to a public policy consultation on pension schemes.
The consultation sought views on a draft amendment in which such transfers could be made to authorised CDC schemes.
The proposed amendment resembles similar such legislation passed by the government in 2018, which in that instance also allowed for master trusts to transfer retirement savings without member consent.
The amendment will mean that prospective CDC schemes, including unconnected multiple employer collective money purchase schemes, will be able to receive transfers without member consent into their schemes in the same way that master trusts are able to.
The government response also made clear that, as is the case with defined contribution schemes, members of CDCs have a statutory right to transfer out of the scheme until they crystallise their benefits.
The government response also established that CDCs must be subject to a “rigorous authorisation and supervision regime”, as is also the case with master trusts.
Maurice Titley, commercial director for data and dashboards at pensions software firm Lumera, said: “Allowing transfers without member consent where savers retain a statutory right to transfer out supports consolidation and gives trustees greater flexibility to move members into authorised CDC schemes where they believe it is in members’ interests.
“At the same time, excluding retirement CDC schemes recognises that member choice should remain a key consideration where transfer options become more limited. As the CDC market develops, maintaining confidence in these new arrangements will depend on strong governance, clear communications and ensuring members fully understand the implications of any transfer.”
The initial consultation that the DWP has published its response to was launched on 23 October last year, and ran for six weeks.
