National Collective Pension Scheme announcement at Labour Party Conference

Commenting on government plans to launch a national collective pension scheme as highlighted at today’s Labour Party Conference by Yvette Cooper, Lauren Branney, Head of CDC, Hymans Robertson comments

“It’s great to see the government plans to launch a national collective pension scheme for workers in the care sector. It’s encouraging to see the government recognising the opportunity that Collective Defined Contribution (CDC) pensions can present for both workers and employers in adult social care.  

“This is an industry particularly well suited to a sector-wide CDC scheme. Workers frequently move between employers, many hold multiple part-time roles. Furthermore, the workforce is predominantly female, with a greater likelihood of career breaks and varied working patterns. Rather than building up a collection of disconnected pension pots, a sector-wide CDC arrangement could allow workers to save in one place throughout their careers, simplifying retirement planning and helping deliver better retirement outcomes. 
 
“Yvette Cooper's comments are an encouraging signal that policymakers recognise the role CDC could play in supporting a vital UK workforce while helping more savers achieve better retirements. CDC has the potential to address some of the biggest retirement income challenges facing lower, and middle, income earners.  They often face a savings affordability challenge during their working lives and a retirement adequacy challenge in retirement. By pooling longevity risk and investing collectively, CDC can provide higher expected retirement incomes than traditional defined contribution arrangements. It can provide an income for life while also removing much of the complexity individuals face when making decisions about retirement income.  There will be trade-offs that come with CDC but overall it offers an excellent opportunity for the sector.
 
“In pensions, where policy decisions can take decades to bear fruit, stability and long-term thinking are essential to success.  The recognition of the role CDC could play in UK pensions by government and wider policy makers is welcome.  CDC has benefited from continued support through successive governments, and it shows the value political stability can play in retirement policy making.  This continued backing increases confidence that it will become an important part of the UK's retirement landscape and indeed can play a valuable role in supporting a vital workforce in adult social care."

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