Opening of CDC authorisation from TPR

Commenting on the opening of CDC authorisation from TPR, Paul Waters, Head of DC Markets, Hymans Robertson, said: 

“The opening of the authorisation process for multi-employer whole of life CDC schemes is a major and welcome milestone. It marks the point at which CDC begins to be accessible to the mass market of employers and their people, representing one of the most significant innovations in UK pension provision for many years. It’s also an important moment for TPR, whose role in scrutinising and authorising schemes will be critical in building confidence throughout the industry as the market develops. Reaching this stage has required substantial collaboration across government, regulators, providers and advisers, and it’s important to recognise the work that has gone into creating a robust framework for these new schemes.

“CDC can play a meaningful role in addressing the significant challenge of retirement adequacy. By pooling longevity risk and investing collectively, it offers the prospect of higher retirement incomes than other DC alternatives, alongside a simpler member experience with fewer complex decisions at retirement. The trade-off for this is typically less flexibility, or the ability to pass on a legacy if you die.

“As employers look for ways to help improve retirement outcomes for their workforce, CDC represents an attractive new option. Having worked closely with policymakers and regulators, and supported the development of a number of emerging CDC propositions, we have seen first-hand the level of innovation and commitment being invested in bringing these schemes to market.

“While authorisation is an important step, the long-term success of CDC will ultimately depend on how schemes are designed, governed and operated in practice. The experience of the first generation of authorised schemes will be critical in building confidence across the market and demonstrating how multi-employer CDC can deliver in practice for both employers and members. We are excited to be part of this with our clients as CDC moves towards becoming an established part of the UK pensions landscape.”

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