Key points include:
CDC pension schemes pool contributions and investment returns across members to provide a targeted inflation-linked income for life, without requiring complex financial decisions from members.
The UK's first live CDC scheme, the Royal Mail Collective Pension Plan, launched in October 2024, with multi-employer CDC schemes able to apply for regulatory authorisation from summer 2026 and expected to begin accepting contributions from 2027.
Aon's modelling suggests CDC can deliver around 30% better retirement outcomes than traditional DC lifestyling into an annuity, and up to 50% higher pension than an inflation-linked annuity when used at retirement.
Well-designed schemes incorporate transparent benefit adjustment rules and intergenerational fairness mechanisms, and have been shown to remain resilient across a range of adverse market conditions including the Great Depression, the 2008 financial crisis and the Covid-19 pandemic.
Retirement CDC (RCDC) allows members to transfer existing DC pots into a CDC pension at retirement and O is expected to become available from 2028, alongside new guided retirement duties on DC schemes.
Chintan Gandhi, partner and head of Collective DC at Aon, said: “Aon’s research has shown that CDC pensions, for the same contribution level, could on average deliver around 30 percent better outcomes than a traditional defined contribution scheme lifestyling into an annuity at retirement – while also providing income levels at retirement that are smoother between generations of retirees. Whole-life CDC pensions provide a powerful tool to attract, reward, retain and retire employees on time, as well as strengthening organisations’ employee value proposition in competitive labour markets. We believe that CDC will revolutionise pensions in the UK, creating value for both employees and employers.”
Read the full report CDC – Everything you need to know in 2026 here
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