The Government has confirmed it will legislate to introduce collective defined contribution (CDC) pension schemes.
Minister for pensions and financial inclusion Guy Opperman says he will set out detailed proposals within the coming weeks. The Department of Work and Pensions will also respond formally to the recent consultation on the introduction of CDCs.
Opperman – speaking at the TUC pensions conference – said that CDC schemes have the potential to get good outcomes for employers and employees when they work together.
He welcomed the TUC’s constructive response to the consultation. CDCs are seen as offering a halfway house between traditional DB benefits and DC schemes. Here the trustees aim to pool risk and deliver an projected income in retirement, although this can be subject to change and is not guaranteed.
Opperman says: “CDC has the potential to open up new avenues for employers and their workforces to develop the best pension arrangements for their individual circumstances.”
He highlighted the collaborative work on CDC pensions going on behind the scenes between the DWP, Royal Mail, and the Communication Workers Union to make the proposed schemes a reality.
“The positive and constructive way that the CWU and Royal Mail have worked [on CDC schemes] is an important lesson to us all about how the best can be achieved.”