Delivering collective defined contribution pension schemes

12 November 2018

The government has published a consultation which sets out its proposals as to how a particular form of collective defined contribution (CDC) scheme might work in the UK and the legislative and regulatory regime that would be needed to support any such scheme.

CDC pension schemes allow contributions to be pooled and invested to give members a target benefit level.

Advantages of CDC schemes include that they:

  • Provide savings and income in retirement option within one package that is potentially attractive to people who are uncomfortable making complex financial decisions at the point of retirement

  • Enable the sharing of longevity risk between members, therefore providing each individual member with an element of longevity protection without the cost of accessing the insurance market

  • Allow employers to offer their employees a pension scheme, which offers an income in retirement in the form of a pension from the scheme’s own assets, but without the risks and balance sheet impact of sponsoring a defined benefit plan


The government recognises there is a growing interest in CDC schemes, and the Work and Pensions Select Committee recently recommended that the government should act quickly to legislate to allow the schemes.

The consultation will run until 16 January 2019.

Geographical extent - Applies to England, Wales and Scotland. It is envisaged that Northern Ireland will make corresponding legislation.