What is CDC?
CDC is a new style of pension scheme designed to bridge the gap between Defined Benefit (DB) and Defined Contribution (DC) schemes. It has the potential to offer members a higher and more predictable retirement income than DC and take-out the risk of unexpected pension-related costs for employers compared to DB.
How it works
Unlike a DC scheme, a CDC scheme provides a whole-life pension to members. The contributions employers and members pay are fixed and pooled into a collective fund. By pooling investment and life expectancy risk amongst the membership, CDC is expected to generate higher returns than an individual DC scheme resulting in higher expected benefits. Annual increases to benefits depend on the performance of the scheme. This removes the possibility of the employer having to plug a funding gap.
Contact our team
Ask a question, book a call with us or learn more about CDC.
We continue to believe that Collective Defined Contribution (CDC) will have an integral role in the future of pensions in this country and want to ensure as many savers as possible can take advantage of the benefits of CDC.
CDC and TPT
Although CDC has been operating in other countries for a few years, it was only introduced to the UK as part of the Pension Schemes Act in 2021. The Department for Workplace Pensions started looking to extend CDC to multi-employer arrangements in 2023. As a result, we’re actively working through the considerations of a multi-employer CDC scheme. We’d like to hear from both new and existing employers as we look to develop our CDC offering. See what our Employer & Strategic Partnerships Director Andy O’Regan thinks about CDC using the link below.