New CDC scheme launched by Arboreum Pensions

A new multi-employer whole of life Collective Defined Contribution (CDC) scheme has been launched by new CDC pension proprietor Arboreum Pensions. Arboreum Pensions has been created with support and warm encouragement from the Vestey and Timpson family businesses.

The scheme will offer collective pensions to the wider employer market and provide members with a target-based income for life. It’s designed to admit multiple, unrelated employers over time through a single arrangement, supported by professional governance, actuarial oversight and long-term investment management. 

With Arboreum Pensions acting as the scheme proprietor, the CDC scheme offers a new approach between traditional DC pension schemes, where individuals carry most risks, and DB schemes, where employers promise a guaranteed level of pension. Members will benefit from the collective pooling of investment and longevity risk alongside the target-based income for life. The new CDC scheme reduces the need for members to manage retirement savings and drawdown decisions alone. 

Arboreum is working with leading actuarial advisors Hymans Robertson and legal advisors CMS in developing the scheme.

Commenting on the launch of the CDC scheme, Adrian Boulding, managing director, Arboreum Pensions, said: 

“For too long, employees have faced a choice between DC schemes that place most of the risk on individuals and DB pensions that are increasingly unavailable in the private sector. We’ve created a different way forward bringing people together in a collective, CDC, arrangement. With this new scheme we aim to provide a target-based income for life and help more workers achieve better retirement outcomes. 
 
“Many businesses are looking for a pension arrangement that reflects their long-term commitment to their people. Our CDC scheme has been designed to meet that need, combining professional investment management, collective risk sharing and strong governance within a sustainable multi-employer structure. Its long-term framework is focused on fair and sustainable outcomes for current and future members and gives UK employers a new way to offer a high-quality workplace pension without taking on a DB promise.”

Commenting on the importance of the launch, Paul Waters, partner at Hymans Robertson, said: 

“The launch of Arboreum Pensions is an important milestone for the development of CDC pensions in the UK. For many employers, there’s been a gap between what is offered by DB schemes with a certainty of benefits yet uncertain employer cost of DB pensions and the individual responsibility placed on members in DC schemes. 
 
“CDC offers a different approach. It enables members to share risks collectively and benefit from a long-term investment strategy focused on delivering sustainable retirement incomes. This model has the potential to improve member outcomes as well as broaden access to high-quality workplace pension provision. 
 
“It has been a privilege for our team at Hymans Robertson to support Arboreum Pensions in developing this proposition. Its focus on strong governance, good member outcomes and bringing CDC to a wider employer market makes is a significant step forward for pension innovation in the UK.”