More savers to benefit from new pension provision

Retirement plans for thousands of expats could be given a welcome boost with consultations underway on how Collective Defined Contribution pension schemes could be extended to more savers.

Ideas on how Collective Defined Contribution (CDC) pension schemes could be extended to more savers were explored with industry partners today, March 28, by the Minister for Pensions.

Minister for Pensions Guy Opperman highlighted how the regulations will come into force on August 1, and discussed the ways in which the next phase of CDC schemes might be taken forward with a consultation planned later this year.

The Minister said: “CDC schemes have the potential to transform the UK pensions landscape and deliver better retirement outcomes for millions of pension savers.

“I firmly believe that we should capitalise on the enthusiasm that is building for extending CDC to other types of pension scheme, such as multi-employer schemes and Master Trusts,” he said at a forum of the Royal Society of Arts (RSA)

David Pitt-Watson and Hari Mann, co-chairs of the RSA’s CDC forum said: “People who save for a pension typically want to secure an income which will last them until they die, not just to be presented with a cheque when they retire. That is what CDC pensions are designed to do.

“The government is to be congratulated in creating regulations which allow everyone to benefit from well managed CDC plans. The evidence suggests this can transform retirement for millions of people.”

CDCs work by employers and employees contributing to a collective fund from which individual retirement incomes will be drawn.

These collective funds can be invested in what are called ‘higher return seeking assets’ over a longer period than traditional DC schemes, benefiting the growth of the fund and its members.

Currently, regulations will provide for single and connected employer CDC schemes.

Some parties have already expressed an interest in pursuing multi-employer CDC schemes as an offer for their members, as well as proposals for Master Trust and CDC models which offer ‘decumulation only’ (when pension savings are converted to retirement income).

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