The Work and Pensions Committee has extended the deadline of its inquiry into collective defined contribution schemes to the end of this month.
The Committee has confirmed that the CDC inquiry will now close on the 31 January rather than the previously planned 8 January.
The Work and Pensions Committee announced its plans to launch an inquiry into Collective Defined Contribution schemes in November 2017. The Committee's inquiry is considering the merits of CDCs, the role that they could play in the pensions landscape, the potential benefits to savers and the wider economy and the legislative and regulatory framework that would be required to successfully implement these schemes.
Also known as defined ambition schemes, CDCs differ from defined benefit schemes as they do not promise a retirement income, but have a target or "ambition" amount that it will pay out to members based on long term, mixed risk investment plans. These schemes have view to pay out an adequate level of index-linked pension for life, but also have the ability to redifine the benefits offered if circumstances, like volatile economic conditions occur.
The Pension Schemes Act 2015 outlines "shared risk/defined ambition" or CDC as a distinct category. Despite this, however, regulations under the Act to implement these schemes have not been introduced. This was delayed by further announcements in October 2015 that plans for CDCs would be paused indefinitely in order to allow for auto-enrolment and pension freedoms to be implemented.
Those in favour of CDC schemes have argued that they provide greater assurance of retirement income and more efficient pooling of costs and risks among members than traditional DC schemes.
Committee chair Rt Hon Frank Field MP said: “What the Select Committee is aiming for is to retain some of the best features of company schemes in a different age when employers are no longer willing or able to sustain the burden of final salary promises to employees, who could instead club together and pool the risk themselves.”
