Pensions - Articles - New DWP consultation on CDC is a step forward for pensions

Aon has welcomed the Department for Work & Pensions’ (DWP) formal consultation on enabling Collective Defined Contribution (CDC) pension schemes in the UK.

 Kevin Wesbroom, senior partner at Aon, said: "This consultation is a sound, proportionate approach to introducing new legislation that can improve retirement outcomes for many. As the Minister for Pensions has said, a robustly designed and appropriately regulated CDC scheme is an innovation for the benefit of savers and business alike. The approach taken to legislation is welcome, since it has clearly taken on board that the UK can learn from overseas CDC schemes, but does not have to slavishly follow them."

 Matthew Arends, partner at Aon, said: "The consultation has 25 questions, and we believe we can offer sound responses to all of the points raised. This is based on the extensive analysis, modelling and development work we have carried out both for ourselves and for Royal Mail. The consultation offers an opportunity to rebut the unsubstantiated claims that many of the naysayers have put forward repeatedly and gives us a unique opportunity to show why the positives we have identified in CDC, outweigh the challenges noted in the consultation."

 Kevin Wesbroom continued: "The consultation is well directed and picks up on many of the attractions of CDC schemes. Namely that it offers a savings and retirement income option within one package, the potential for higher investment returns, the sharing of longevity risk between members, together with a robust retirement solution for people who are uncomfortable making complex financial decisions at the point of retirement.

 “We firmly believe that the challenges noted are surmountable and we will do all we can to support the speedy introduction of a sound, robust regime that will allow these schemes to flourish, and to deliver sustainable, affordable and secure future retirement arrangements."

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