There has been strong support for government proposals to introduce multi-employer CDCs, as the consultation on Occupational Pension Scheme regulations for these new arrangements comes to a close.
However in their responses a number of consultancy firms said they want more information on how such schemes might work in practice.
Hymans Robertson partner Kathryn Fleming says: “This consultation is a welcome stepping stone towards CDC that offers great value for money. We are hugely supportive of CDC at scale to deliver better pensions for the same spend. We are concerned, however, that, in this consultation, it doesn’t feel like enough consideration has been given to how industry-wide schemes (sectorial providers) will work in practice. These regulations feel geared towards commercial schemes.”
Hymans adds that it would like to see proposals for decumulation-only CDC and for regulations follow a “less prescriptive approach” Fleming adds: “We’d like to see a more principles-based approach which would give sufficient flexibility in the design of CDC schemes for innovation to flourish.”
Isio director Iain McLellan said: “We welcome the draft multi-employer CDC regulations which are attempting to expand the access to a CDC pension to a much greater proportion of the UK workforce.
“Rather than sticking too closely to the existing single-employer CDC scheme rules that were written for the Royal Mail CDC scheme, we would like to see greater flexibility introduced in a number of areas, including the frequency of updating accrual rates/contributions and how annual increases are calculated. We believe that this will lead to more innovative scheme designs and greater options for employers and their staff.”
Meanwhile provider TPT Retirement Solutions said this was a “welcome development” for the industry.
David Lane, chief executive at TPT Retirement Solutions said : “Proposals to extend CDC provisions are an important step towards evolving the UK pension landscape for the better. These reforms aptly confront the biggest issues the introduction of CDC will present.
“Choice for employers is key. Different types of benefit structure will be appropriate for employers in different sectors. Therefore, we believe that an expanded occupational pension scheme market will lead to better expected outcomes for individuals in retirement.
“While we have watched with interest the recent launch by Royal Mail of the first CDC scheme in the UK, it is the introduction of multi-employer schemes that will allow for schemes with the scale required to open CDC to the largest number of people.”
