The Department of Work and Pensions (DWP) has launched a public consultation on a policy framework for broadening collective defined contribution (CDC) provision in pension schemes.
The consultation was launched to get views from the public on policy proposals for broadening CDC provision beyond single or connected employer schemes, to accommodate multi-employer schemes.
It has also asked for opinions on the role of CDC in decumulation, including how products of this kind might work in practice, and whether there is a significant appetite for decumulation-only CDC products, in order to further its understanding of the specific challenges their designs might pose.
Only applicable to people living in Britain, the consultation is aimed at pension scheme trustees and managers from DC master trust schemes, pension scheme service providers, other industry bodies and professionals, employers which sponsor an occupational pension scheme, and those seeking to establish a CDC scheme.
It is anticipated by the government that Northern Ireland will make corresponding legislation regarding this topic, as occupational pensions are a devolved matter for the country.
The consultation began this week and will close on Monday 27 March.
Kathryn Fleming, partner at Hymans Robertson, said: “This consultation is another step along the journey towards equipping pension providers with the tools to allow them to design decumulation solutions that can meet the needs of future DC savers. CDC in decumulation might not be the right solution for all DC savers, recognising that retirement needs are very personal and multi-layered.
“It will offer the exciting prospect of a solution that bridges the gap between the complete flexibility and risk of drawdown and the certainty but irreversible option that is offered by annuities. It is right that the conversation takes place now as the scale required to deliver these solutions is fast approaching.”