Boosting retirement outcomes and improving the member experience are the opportunities that most excite sponsors and trustees about the collective defined contribution model, according to research by consultancy Lane Clark & Peacock.
More than half of respondents to a recent LCP webinar poll said the biggest attraction of CDC pensions is their potential to improve member outcomes and the retirement experience without increasing employer pension spend.
The poll, conducted during LCP’s webinar “As CDC enters the mainstream, is your pensions offering keeping pace?”, found that 29 per cent of respondents were most excited by CDC’s ability to significantly improve retirement outcomes for an existing pension spend, while a further 25 per cent highlighted its potential to improve the retirement experience for DC savers.
Elsewhere, 24 per cent identified the launch of Retirement CDC schemes as the most exciting development, 17 per cent pointed to the launch of Whole-of-Life CDC schemes and 3 per cent cited CDC as a potential use of defined benefit surplus.
Following the launch of the Royal Mail CDC scheme, regulations for multi-employer CDC schemes are due to come into force on 31 July 2026, while the development of Retirement CDC solutions is expected to play an increasingly important role in the emerging push to improve decumulation via guided retirement.
Steven Taylor, partner at LCP, says: “What stands out from the polls is that sponsors and trustees are laser focused on outcomes. The greatest interest in CDC comes from its potential to improve both incomes and member experience through retirement without requiring higher contributions.”
LCP also claimed that one of the most significant developments is the emergence of Retirement CDC. Rather than focusing solely on the accumulation of pension savings, Retirement CDC aims to help members convert DC pots into a managed retirement income, providing greater support for those navigating retirement decisions, especially to those who most value a regular income in retirement, such as private renters.