CDC, or Collective Defined Contribution, is a new way for employers to help staff save for their retirement. Introduced in the Pension Schemes Act 2021, CDC is an alternative pension scheme design that provides a fixed contribution for employers and a reliable income for life for members.
CDC is designed to provide its members with an income for life, as opposed to a savings account. Members can see the pension at retirement they are building up, and they cannot outlive their savings.
We are offering a complimentary training session to any organisation interested in what CDC can offer. We’ll take you through the basics and give you ample opportunity to discuss how it could work for your organisation or scheme.
Unlike Defined Benefit and Defined Contribution schemes, CDC offers advantages to both employers and scheme members.
CDC is an attractive alternative for employers keen to offer decent pensions without the risk of cost increases and large liabilities.
CDC can give members a higher and more reliable retirement income than individual Defined Contribution pensions can guarantee.
We believe CDC will benefit a wide range of organisations and schemes.
At this early stage, we believe that CDC schemes will be of particular interest to:
CDC bridges the gap between DC and DB. With no promised benefits, there are none of the deficits we see in many DB schemes. Crucially though, it delivers an income for life.
Because CDC pensions are not guaranteed and investments are collective, a CDC scheme is free to invest for a good return. They can also benefit from the economies of scale and risk pooling that DB enjoys. And incoming contributions can pay outgoing benefits directly.
Increased investment return means higher pensions at an affordable cost. Although there are no guarantees, members carry the risk collectively rather than individually.
All of this makes CDC pension outcomes much more reliable than individual DC.
The Communication Workers Union (CWU) enlisted the help of First Actuarial when Royal Mail proposed replacing its DC pension fund with individual DC arrangements. First Actuarial played an instrumental role in negotiations and came up with the innovative CDC proposal, which has now passed into law.
Read the case studyAt First Actuarial’s Client Conference, Terry Pullinger of the Communications Workers Union (CWU) spoke of his work with First Actuarial to introduce CDC in the UK. In the video, he argues that with only 3% of DB schemes open to new entrants, society is storing up huge problems.
Find out more about our CDC consultancy if you're interested in exploring the benefits of CDC.
The Communication Workers Union (CWU) enlisted the help of First Actuarial when Royal Mail proposed replacing its Defined Benefit pension fund with individual Defined Contribution arrangements.
“I can’t speak highly enough about First Actuarial – their people have been brilliant. The journey has been inspirational, nothing but a positive experience.”
The risk of a significant cessation debt hung over Watford Community Housing (WCH) as the number of its employees participating in the Local Government Pension Scheme (LGPS) diminished. WCH asked First Actuarial to find an approach to mitigate this risk.
"First Actuarial are very approachable. They’re good at helping managers and Board members digest a very complex and difficult area, and they’ve also been proactive in helping us shape an innovative solution."
First Actuarial partnered with Bromford to communicate extensive pension scheme changes and improve financial wellbeing, delivering more than 40 group presentations to 1,200 colleagues.
"Working with First Actuarial was a highly professional partnership that had a positive effect on our colleagues. We received great feedback on both the group and one-to-one sessions they ran."