Multi-Employer Collective Defined Contribution (CDC) pensions an exciting development

TPT Retirement Solutions, one of the UK’s leading providers of workplace pensions schemes, believes the DWP’s proposals for the extension of CDC to multiple employer schemes represent a welcome development in the evolution of Collective Defined Contribution (CDC) pension provision in the UK. TPT has shared its views in response to the Department for Work and Pensions (DWP) public consultation on the extension of CDC pension provision to whole-life unconnected multiple employer schemes and other related provisions.

TPT believes the introduction of CDC would be valuable for savers in allowing employers to improve the benefits they offer to employees, and in-turn provide another means for workplace pensions to address the socio-economic challenge that many people are not saving enough for an adequate income in retirement.

It is TPT’s view that an expanded occupational pension scheme market which gives all employers, dependent on their given situation, the choice of DB, DC and CDC will be a positive development and will lead to better expected outcomes for individuals in retirement.

As CDC requires scale to be viable, for the largest number of people to benefit from CDC it is necessary to consider solutions which offer consolidation and are available to multiple employers. Given TPT’s years’ of experience providing consolidation and multi-employer pension schemes under DB and DC models, it understands the strengths and operational challenges of a multi-employer scheme structure and is actively engaged in exploring how this can be applied to CDC. 

Subsequently, in its consultation response, TPT agrees that it is crucial these schemes are well regulated and only operated by schemes with sufficient size and expertise to do so. TPT therefore sees it as appropriate for TPR to operate an authorisation regime which sets high standards for the governance and operation of such schemes. As an authorised DC master trust, TPT recognises how this helps to drive better outcomes and maintain high standards. It is encouraging to see the draft regulations are well focused in this area and build upon the structures already in place for DC master trusts and single employer CDC schemes.

David Lane, Chief Executive at TPT Retirement Solutions, comments: 

“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, and we are grateful to the DWP for the way it has engaged with industry before and during the consultation."

"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. Hence our support for these proposals, and our desire to engage further with the DWP and TPR to support the introduction of this exciting new option for the industry.”