TPT Retirement Solutions is preparing the UK’s first multi-employer collective defined contribution (CDC) pension scheme, it announced today.
It follows confirmation from pensions minister Torsten Bell that legislation to enable CDC schemes to operate will be laid before parliament later this year.
Bell welcomed TPT’s announcement today, adding that CDC schemes were “set to be an important, innovative addition to the UK pensions’ landscape with the potential to improve the pension outcomes for millions of savers”.
TPT first announced its interest in the CDC model in 2023, citing the risk-sharing benefits of the concept and its potential to deliver higher retirement incomes than traditional defined contribution (DC).
As well as a multi-employer CDC pension scheme – slated for launch by the end of next year, subject to regulatory authorisation – TPT said it intended to develop “bespoke single-employer CDC schemes for larger businesses seeking tailored solutions”.
DWP to introduce CDC legislation in autumn
Torsten Bell told an industry conference last month that the government will introduce long-awaited legislation for CDC pension schemes in the autumn, enabling multi-employer CDC schemes to be established so that a range of unconnected companies can pool their employees’ pension pots into a collective fund. Read more
The company already operates defined benefit and DC master trusts, and said the CDC addition would mean it could offer “lifelong retirement income options” to pension savers and employers.
Andy O’Regan, chief client strategy officer at TPT Retirement Solutions, said launching a CDC pension scheme would be “a significant step forward for the industry”.
“For interested employers, offering a CDC scheme could become a powerful tool for talent attraction and retention,” he added.
David Lane, TPT’s chief executive, said CDC could “fill a gap in the pensions market and could be the right solution for many employers and scheme members”.
Royal Mail became the first employer in the UK to launch a CDC pension scheme in October last year. The Church of England Pension Board has previously expressed an interest in developing a CDC model.
Paul Waters, head of DC markets at Hymans Robertson, said it was “encouraging to see a provider make a clear commitment – and take a trailblazing stance – to provide a whole of life CDC scheme to their members”.
“CDC enables DC members to benefit from higher expected pensions, and a secure income for life, while having fewer daunting decisions to make than in DC,” Waters said.
Hymans Robertson expects more multi-employer CDC schemes to emerge, with a number of employers expressing an interest in the concept.
“This is set to pick up pace over the coming months, as employers weigh up the advantages of being an early adopter in their sector versus waiting for the CDC market to develop further first,” Waters said.
