CDC pensions

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CDC pensions – a win-win for both employer and workforce

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.

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Register for a free CDC training session 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.

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Why CDC?

Risk-free pension provision for employers

CDC is an attractive alternative for employers keen to offer decent pensions without the risk of cost increases and large liabilities.

Reliable retirement income for members

CDC can give members a higher and more reliable retirement income than individual Defined Contribution pensions can guarantee.

Is CDC suitable for my organisation?

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:

Larger employers (with more than 2,000 employees) keen to provide a higher income for members in retirement than individual DC pensions
Organisations with strong social responsibility values, such as cooperatives, mutuals, housing associations and other not for profits.

How does CDC work?

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.

Our CDC services

Find out more about our CDC consultancy if you’re interested in exploring the benefits of CDC

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First Actuarial joins forces with Royal Mail and CWU to introduce groundbreaking CDC pension scheme

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 study

At a 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.