The UK government plans to consult on a legislative framework for collective defined contribution (CDC) schemes in the next three months, according to pensions minister Guy Opperman.
In a written statement to parliament published yesterday, Opperman laid out the government’s pension-related work, including new powers for the Pensions Regulator (TPR) and its latest thoughts on the development of a pensions dashboard .
Opperman said: “Collective forms of pension saving offer interesting new possibilities, and the [Department for Work and Pensions] is currently working through proposals for the first collective defined contribution schemes in the UK. We intend to launch a formal consultation in the autumn.”
A landmark agreement between Royal Mail and the Communication Workers’ Union (CWU) in February has prompted a fresh debate about the practicalities of CDC in the UK.
The UK passed laws in 2015 enabling CDC schemes, but secondary legislation is still required to make such pension arrangements possible. Parliament’s Work and Pensions Select Committee has been taking evidence from industry experts from the UK and the Netherlands this year to feed in to the government’s thinking.
Paul Masterton, MP for the Scottish constituency of East Renfrewshire, has put forward a so-called “10-minute rule motion” for discussion in parliament on 17 October.
Excellent news - CDC is coming!! @PM4EastRen has tabled a ‘10 minute rule motion’ on CDC in the House of Commons for 17 Oct. It calls for ‘a bill to enable the establishment of CDC pension schemes’. So CDC can become a reality to improve pension outcomes for millions— Kevin Wesbroom (@kevinwesbroom) September 5, 2018
A Royal Mail spokesperson said: “This is an important step forward in enabling us to offer a CDC scheme for our 141,000 employees as soon as possible.
“As the provider of around one in every 190 jobs in the UK, Royal Mail is committed to delivering the best possible pension arrangements for our people. Royal Mail and the CWU hope the legislation required to enable CDC pensions will be introduced at the earliest opportunity.”
Malcolm McLean, senior consultant at advisory firm Barnett Waddingham, added: “Given the very different views that currently exist across the industry, about the need for and value of such schemes, it will be most interesting to see what results from this.”
In addition to the CDC plan, Opperman said the government would publish its conclusions from its consultation on new powers for TPR, and launch a consultation on how to facilitate consolidation of defined benefit schemes.
“This is an ambitious programme of work, which has the potential to further transform the pensions landscape and benefit consumers,” he said.