Interest in collective defined contribution pensions is increasing, with more than three quarters (76 per cent) of UK pension decision-makers set to consider a CDC option within the next three years.
The claims were made in Gallagher’s CDC Report, which examines industry confidence levels, the barriers to implementation and the path to scale for CDC pension schemes in the UK.
The research, which surveyed 250 employers, trustees and pensions professionals, arrives at a time when multi-employer CDC schemes are nearing regulatory approval in the UK.
Interest in the CDC model is growing, with around half of respondents (52 per cent) saying they would be comfortable being an early adopter.
When asked what would increase their confidence, respondents cited clearer regulatory guidance (39 per cent), proven results from early adopters (38 per cent) and positive feedback from unions or employee representatives (37 per cent).
Andre Clarke, senior vice president for investment consulting at Gallagher, says: “In a very short period, the conversation around CDC has moved forward at blinding speed. The Royal Mail scheme gave the UK market its first live example. It is no longer possible to think of CDC as a niche actuarial idea; it is stepping into the spotlight, demanding close attention.”
“However, our research paints a more nuanced picture. There’s a clear difference between exploring CDC as an option and taking the steps to introduce it into an existing benefits package.”
More than half (53 per cent) of respondents expressed that they would be most likely to consider a multi-employer or master trust CDC arrangement, compared with 34 per cent who would favour a single-employer model.
Sector-wide arrangements also saw significant interest, with 86 per cent saying they would find a sector-wide CDC scheme appealing.
