Lifesight, WTW’s £30bn defined contribution (DC) master trust, has confirmed its intention to launch a retirement collective defined contribution (CDC) solution as soon as the UK regulatory framework allows.
Earlier this month, the UK’s pensions minister confirmed that a retirement-only collective defined contribution (CDC) scheme would be introduced this year following the government’s consultation last October. The authorisation by The Pensions Regulator (TPR) is expected to follow in 2027/28.
Subject to final government regulations and the necessary trustee approvals, the solution proposed by Lifesight would offer members an additional retirement option, sitting alongside existing flexibilities, and is intended to help address the growing challenge of converting DC savings into a sustainable income in retirement.
Lifesight said that Retirement CDC (R-CDC) will allow members to convert their DC savings into an income for life.
It explained that in retirement CDC schemes, the income levels will be adjusted over time based on collective investment performance and longevity experience, and the latest expectations of future experience.
Adjustment rates will be calculated by an independent actuary based on valuation assumptions set by trustees, all overseen by an expanded TPR Code of Practice.
LifeSight’s sponsor, WTW, has pioneered the development of UK CDC since its inception and has led wider industry innovations on collective approaches to managing pensions.
As a scheme actuary, WTW has been involved in the launch of single-employer Royal Mail CDC, which was the first scheme to successfully launch a CDC proposition, leading to several other employers exploring a multi-employer proposition.
Jelena Croad, head of LifeSight UK, said: “We believe Retirement CDC will be the best option for the majority of DC members reaching retirement who want the highest sustainable lifetime income from their pension pot. R-CDC does this without putting the burden of managing pension decisions onto the member. This is why we intend to offer R-CDC as soon as legislation allows.”
Croad said that the new solution will play an “important” role for members who don’t want to make active decisions with their retirement savings in later life.
“We see retirement CDC as a key part of Guided Retirement,” she noted.
Simon Ellis, LifeSight chair of trustees, added: “Member outcomes are at the heart of all trustee decisions. It is very exciting and satisfying that LifeSight is leading innovation in this area, by offering a range of new solutions to members, which are expected to address the significant challenges facing DC retirees.”
