Chintan Gandhi, partner and head of Collective DC at Aon in the UK, said: "This long-awaited consultation, which closes on Tuesday 19 November, marks a significant next step for the development of CDC in the UK. Opening up to multi-employer whole-life CDC schemes, including those provided by master trusts, will meet the needs of employers and the self-employed. We believe these schemes have the potential to help over 30 million UK workers build up a pension. However, members of all whole-life – and, in future, all decumulation-only - multi-employer CDC schemes deserve the same protections to safeguard their pensions, regardless of the nature of the scheme selected on their behalf.
“For this reason, it is our strong view that all multi-employer CDC schemes should have a Scheme Proprietor and a specific person responsible for promotion and marketing. In all cases, both must be assessed by The Pensions Regulator (TPR) against the fit and proper person requirements. This is an important safeguard that would ensure quality and protection for all members of CDC schemes, regardless of whether they are in a ‘non-commercial’ or not-for-profit multi-employer scheme, or one that is commercially-run.”
Matthew Arends, partner and head of UK Retirement Policy at Aon, said: “Looking beyond these regulations, we ask for the swift extension of TPR’s CDC guidance - this is of equal importance. It is only with visibility of the entire regulatory regime that providers can judge whether they can introduce whole-life multi-employer CDC schemes to the masses - and in a way that is commercially viable. Following on from the Mansion House announcements last week, the swift introduction of scalable whole-life multi-employer CDC schemes could also help to progress the government’s wider pension priorities. By their nature, well-designed and well-run multi-employer CDC schemes will be of suitable size and ideally suited to investing in productive asset classes.”
Chintan Gandhi continued: “Multi-employer whole-life CDC schemes - including those delivered by master trusts - will allow sharing investment and longevity risks across the entire scheme membership, while, on average, providing better pension outcomes in retirement than might otherwise be available. Without individual members needing to make complex decisions, whole-life CDC would provide employees with an income for life in retirement – an income that is expected to keep pace with the cost of living. This type of multi-employer whole-life CDC scheme should be of interest to all employers in addition to those who are paternalistic and/or have unionised workforces. The new regulations introduce greater flexibility in CDC scheme designs that will also suit all employers’ circumstances, including in sectors where workforces are transient in nature, or where they typically move around between a group of employers.”
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