Commenting, Steven said: “We have been calling for a while for a truly joined up pathway for the future of workplace pensions and last week’s suite of announcements are a really good signal of that intent.“Especially for new areas such as CDC it is brilliant to see a new emphasis on decumulation which will bring into sharp focus the challenges of helping individuals to secure the best possible incomes in retirement.
“It will be important to avoid losing momentum in the Government’s ambitious timetable and the upcoming multi-employer CDC regulations are an important next step in building this new sector. Equally vital will be for DWP to continue to work closely and visibly with regulators and industry to make sure that market innovators get the real time feedback and support they need as they bring CDC solutions to market.
“Decumulation only CDC will also be a game changer if it enables the many millions currently saving in DC pots to access new options in retirement that can significantly boost expected pensions compared to traditional annuities but without the complexity of managing drawdown arrangements.
“For example new Guided Retirement requirements mean that from as early as 2027, DC schemes will need to offer a decumulation solution “designed to provide a regular income” and that meets the “needs and interests” of members. Especially in industries where employees have moderate incomes, we expect this will mean DC Trustees and sponsoring employers now needing to consider in detail whether CDC or other similar solutions can best meet members needs.
“Ultimately member outcomes must be the key driver of these reviews and we also look forward to seeing how the Government’s second stage Pension Review on Adequacy will help bring these strategic themes together. “
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