November 2024
21Nov

UK. Industry calls for more flexibility around CDC regulation

There has been strong support for government proposals to introduce multi-employer CDCs, as the consultation on Occupational Pension Scheme regulations for these new arrangements comes to a close. However in their responses a number of consultancy firms said they want more information on how such schemes might work in practice.  Hymans Robertson partner Kathryn Fleming says: “This consultation is a welcome stepping stone towards CDC that offers great value for money.  We are hugely supportive of CDC at scale to deliver...

November 21, 2024
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21Nov

US. CalPERS affirms commitment to ESG amid changes coming to Washington

CalPERS CEO Marcie Frost affirmed the $522.4 billion pension fund’s commitment to environmental, social and governance investing in the face of expected federal policy changes stemming from the recent election. Election results make clear that change is coming, Frost told the board of the California Public Employees’ Retirement System, Sacramento, at its Nov. 20 meeting. “We expect the year ahead will include new voices and viewpoints on several issues, including climate- focused investing, corporate governance and healthcare policy,” Frost said. “We welcome those...

November 21, 2024
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11Nov

South Africa. How CDC may revolutionise the pension industry

A look at how collective defined contribution schemes differ from DB and DC schemes and why SA’s pension industry should note the shift in the UK. The local pension industry seems poised to embrace the collective defined contribution (CDC) model in the future despite their complexities. New administration systems to accommodate these types of structures will have to be designed as well as new regulations to govern them. An employer and member education drive to explain how these...

November 11, 2024
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08Nov

UK. Govt to present regs on CDC to parliament ‘as soon as able to’

Pensions Minister, Emma Reynolds, has said the government intends to present regulations to extend collective defined contribution (CDC) provision beyond single or connected schemes to parliament “as soon as [they] are able to”. Earlier this month, a consultation was launched by the Department for Work and Pensions on legislation to broaden CDC’s scope, which currently limits these schemes to individual employers or groups with existing connections. The extension seeks to allow unrelated employers to join CDC schemes, potentially opening up this pension...

November 8, 2024
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October 2024
07Oct

UK. Royal Mail launches collective defined contribution pension plan

Royal Mail has launched a collective defined contribution (CDC) pension plan to provide its more than 100,000 employees with a cash lump sum and an income in retirement. Along with the Communications Workers Union (CWU) and Unite CMA, the employer designed and implemented a pension arrangement for its workforce that was affordable for itself and its employees. Every employee with at least one year of service is eligible to join, with the majority joining automatically. The plan pools members’ contributions and provides staff...

October 7, 2024
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August 2024
30Aug

Collective Defined Contribution (CDC) Schemes: Assessing Capacity for Alternative Investments

By Aili Chen, CFA As pension systems adapt to changing economics and demographics, there is growing interest in collective defined contribution (CDC) schemes as they offer a different approach to retirement savings compared to defined benefit (DB) schemes. Instead of providing a guaranteed pension payment, CDC schemes provide workers with a pot of money to use in retirement, alleviating corporate sponsors of the responsibility and cost associated with providing lifetime guaranteed benefit payments. The size of the pension pot can...

August 30, 2024
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30Aug

Collective Defined Contribution (CDC) Schemes: Assessing Capacity for Alternative Investments

By Aili Chen, CFA  As pension systems adapt to changing economics and demographics, there is growing interest in collective defined contribution (CDC) schemes as they offer a different approach to retirement savings compared to defined benefit (DB) schemes. Instead of providing a guaranteed pension payment, CDC schemes provide workers with a pot of money to use in retirement, alleviating corporate sponsors of the responsibility and cost associated with providing lifetime guaranteed benefit payments. The size of the pension pot can...

August 30, 2024
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July 2024
24Jul

UK. Royal Mail to launch UK’s first CDC plan in October

Royal Mail Group has confirmed that the Royal Mail Collective Pension Plan will launch as the UK’s first collective defined contribution plan on October 7, 2024. The new CDC passed the Regulator’s assessment process in 2023 and every employee with at least a year’s service will be eligible to join. Employees will contribute 6 per cent of their pensionable pay each month into the collective pot, while Royal Mail will contribute 13.6 per cent. Benefits under the scheme include an...

July 24, 2024
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17Jul

UK. CDC benefits may be 50% greater than those offered by DC, says LCP

The expected benefits offered by collective defined contribution (CDC) schemes could be 50% greater than those offered by defined contribution (DC) schemes, research from Lane Clark & Peacock (LCP) finds. The consultancy examined 2,500 simulations looking at a 43-year-old saver beginning a 25-year career, with the assumption of a 12% annual contribution rate. Its analysis compared the expected retirement pension as a proportion of the final salary for a typical CDC scheme and DC scheme and found CDC benefits could...

July 17, 2024
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April 2023
14Apr

UK. TPR authorises first CDC pension scheme

The Pensions Regulator (TPR) has authorised the UK’s first collective defined contribution (CDC) pension scheme. CDC schemes provide an alternative to traditional defined benefit (DB) and defined contribution (DC) pension schemes and see member and employer contributions pooled in a collective fund from which an aspired to pension income for life is drawn. The pooling of longevity and investment risks makes CDC schemes more resilient to market shocks. Yesterday (April 13), the regulator published a list of authorised CDC schemes on its...

April 14, 2023
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