Defined Benefit (DB) pensions have given employers headaches in recent decades. Volatile financial markets and regulatory change have led to increased costs and risks for employers with DB schemes.
With Defined Contribution (DC), on the other hand, it’s the scheme members who get the headache. These individual-based saving pots make it impossible to work out exactly how much to contribute, resulting in unpredictable retirement income.
CDC is a fundamentally new type of pension scheme, offering advantages to employers and members alike:
- No risk of cost increases for the employer
- Higher and more reliable retirement income for the member, compared with DC.