Govt to present regs on CDC to parliament ‘as soon as able to’

Pensions Minister, Emma Reynolds, has said the government intends to present regulations to extend collective defined contribution (CDC) provision beyond single or connected schemes to parliament “as soon as [they] are able to”.

Earlier this month, a consultation was launched by the Department for Work and Pensions on legislation to broaden CDC’s scope, which currently limits these schemes to individual employers or groups with existing connections.

The extension seeks to allow unrelated employers to join CDC schemes, potentially opening up this pension option to a wider range of workers and industries.

Speaking at the launch event for Royal Mail’s CDC scheme, Reynolds emphasised that while the exact timeline would depend on issues arising from the consultation, the aim was to move forward with regulations for parliamentary approval “as soon as able to”.

She outlined a phased approach, with plans to “introduce regulation next year”, followed by parliamentary approval, before bringing legislation and the updated regulator’s code into effect “as soon as practicable” after that.

“We have to take this in stages,” she said. “We’ve got the consultation. The plan would be to introduce regulation next year and then we would need that to go through parliament.

“Then we would bring the legislation and updated regulators code into force as soon as we can. So, pretty soon.”

Addressing CDC’s potential role in the Pensions Review and the Pension Schemes Bill, Reynolds clarified: “While CDCs do not feature directly in the Pensions [Schemes] Bill, we envisioned that they would have a role to play in our consolidation aims and in our proposals to require schemes to offer retirement products”.

“My department will explore this further as part of our approach to improving security in retirement,” she added.

The minister also expressed her enthusiasm for CDC, stating that it offers “real potential to protect against longevity risk” and “great advantages” for pension savers when they retire, as well as for the broader economy.

Reynolds also said she thinks that CDC can help deliver on both of her overarching objectives, of improving retirement outcomes for future pensioners and increasing pension investment in UK productive assets.

“They are a very promising innovation for our pensions landscape,” she added. “CDC [schemes] offer broad advantages to the economy and have an important role to play in supporting the government’s growth mission.”