There is growing support among employers and pension professionals for new collective defined contribution (CDC) schemes.
Research by Aon found that almost four out 10 (38 per cent) of employers would consider a scheme for building pension benefits, and almost half would consider offering a CDC to DC scheme members at retirement. In total only 7 per cent were against CDCs as a pension model.
This research was conducted during Aon’s 2021 Virtual Pensions Conference series, and shows how support for these new schemes is gaining ground among the pensions industry.
Aon, head of collective DC Chintan Gandi says: “Aon has been prominent in its support of CDC, so the results of our conference session polling were very encouraging.
“CDC is still an entirely new form of pension design in the UK – and one that isn’t even properly here yet. Nevertheless, the support shown in this polling testifies to how the UK pension industry is seeing the potential value that CDC can provide to both employer and member outcomes.
“It was great to see that 38 per cent of employers would consider providing their employees with a CDC pension and the advantages of its features. These include a target income for life in retirement from fixed cost DC savings, delivered in a way that saves employees from having to make complex financial and investment decisions.”
He adds: “CDC has clearly had a long gestation period but the first set of regulations and guidance on ‘own trust’ CDC schemes are set to be in force by the end of 2021. Further regulations and guidance covering wider forms of CDC, such as multi-employer and decumulation-only designs, including through master trusts, will soon follow. The dawn of a new pensions era is finally upon us.”