The UK pensions industry has been urged to be “open-minded” to innovation such as collective defined contribution (CDC), as more employers assess whether the model could work for their workforce and balance sheets.
A poll conducted at a conference on 19 March hosted by TPT Retirement Solutions found that just 33% of attendees believe that CDC will become a mainstream workplace pension offering within the next three years.
Alison Hatcher, professional trustee at Vidett, encouraged delegates to consider emerging options.
She said: “There are so many options, there’s innovation. We want to create a market where there is choice, and the only way to do that is if everybody considers the choices available to them. If we create or discount anything, then I think we’re doing ourselves an injustice, and we’re not taking advantage of the opportunity we have today that could greatly benefit members.”
Legislation enabling multi-employer CDC, alongside The Pension Regulator’s code of practice, is expected to take effect at the end of July 2026.
In May 2025, TPT announced it would launch a multi-employer CDC with plans to complete authorisation by the end of 2026. Meanwhile, the Church of England confirmed in February that it is exploring a CDC arrangement for its employees.
Speaking at the event, Muntazir Hadidi, head of pensions at First Bus, said the UK’s largest transport operator is watching the development of CDC “with interest”.
For employers to adopt CDC, Hadidi said it must demonstrate clear value. “It needs to provide a buck for our money – better retention and improved member outcomes at the same cost,” he explained.
He added that board approval would depend on evidence that CDC can deliver better outcomes without increasing costs. However, he noted that any move towards CDC would take time.
“If we were to consider CDC, that journey could take at least a year,” he said, citing the need for board education and employee consultation.
Communication remains a key challenge. Hatcher acknowledged that engaging members can be “very difficult” but stressed the importance of consistency.
She said: “It’s important to communicate with members at all times, across any type of scheme. With CDC, the key is universal simplicity and consistent messaging from both the employer and the trustee.”
Hadidi suggested the CDC could ultimately simplify member understanding.
“It’s much easier to talk about a pension than it is about pots,” he said. “People often ask how they take their pension, and you have to explain that in DC it’s actually a pot of money. With CDC, there’s an income, which is easier to understand.”
He added that First Bus’s “heavily unionised” workforce has shown interest in CDC, making it “a very interesting conversation”.
However, he cautioned that scepticism could remain a barrier. “People can be cautious of something that seems too good to be true.”
