Thursday, November 14, 2024

Government consults on plans to modernise pension provision

The UK government is fast-tracking plans to modernise its own pensions system by broadening access to Collective Defined Contribution schemes.

CDC pension schemes were first introduced to the UK in 2022, and have the potential to deliver reliable returns for savers, while ensuring more predictable costs for employers.

Today, industry experts, savers and pension providers can have their say on new proposals to extend the current offering of CDC pension schemes to more employers, delivering better value for money for future pensioners and unlocking huge investment potential.

In Canada, the funds from pooled pension contributions are invested into a wider range of assets like infrastructure, startups and private equity – which can benefit the wider economy and boost returns.

Extending CDCs could similarly allow for greater return on investment for those saving into the schemes and allow for larger investment in the UK – supporting the Government’s growth mission to boost the economy.

Minister for Pensions Emma Reynolds said: “We are seizing this opportunity to modernise our pensions market to deliver better outcomes for millions of workers. People work hard to put money aside for their pension with every pay cheque. This significant innovation will offer a more predictable income and greater finance security for future pensioners.”

Currently only single or connected employers can set up CDC schemes, with the first scheme launched by the Royal Mail yesterday.

Building on the significant appetite from industry for extending CDC provision, the Government is now seeking to broaden access further by allowing unconnected multiple employer schemes – making this pension model more accessible to a wider range of businesses and employees.

This work builds on plans to review our pensions landscape as well as our new Pension Schemes Bill which could boost pension pots – with further consolidation and broader investment strategies to possibly deliver higher returns for pensioners.

The consultation seeks views from employers, industry experts, pension providers and the public on draft regulations and their potential impact.

The consultation will run for six weeks – running until 19 November 2024.

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