CDC legislation must ‘accommodate everybody’ – Opperman

Legislation to enable collective defined contribution (CDC) schemes must be made to “accommodate everybody” and not just Royal Mail, Minister for Pensions and Financial Inclusion Guy Opperman has said.

Speaking at a Work and Pensions Committee meeting on CDC schemes, Opperman, attending with the Department for Work and Pensions deputy director, private pensions policy, Ronan O’Connor, was asked in detail about the DWP’s involvement with Royal Mail on the creation of legislation to allow CDC schemes.

The Minister said the DWP has met with Royal Mail and the Communication Workers Union on several occasions. Opperman himself first met with representatives from both parties on 21 February, and described it as a “positive meeting”.

He noted that Royal Mail and the CWU have been very keen to stress that they are on the same page and are “joined at the hip” in their desire to set up such a scheme. However, he would not comment on outcomes as he “can’t define how well this will turn out” as it is too early to assess.

“We are minded to assist, but at the same stage I don’t want to give any cast iron guarantees, because self-evidently this is very early stages. There is drafts that they have submitted, and if it is the case that we are able to progress this then we would wish to assist in that,” he said.

Asked whether any legislation created to allow Royal Mail’s CDC scheme will be future proofed, O’Connor said “absolutely” as the DWP is “not in the habit of making legislation just for specific schemes”.

“We have to work with [Royal Mail] on understanding how we might need to change legislation so it can work for them, but also for anybody else in that situation.”

Work and Pensions Committee chair Frank Field noted that CDC schemes could be the next stage of pension development in the country. In response, Opperman said “there is only one person in the queue at this stage” but it is possible “that others may wish to do this”.

“We’re not in the business of creating legislation, bespoke pieces, for one individual organisation. Part of the difficulty is…that it is important that legislation is created in a way that can accommodate everybody because if you get in to bespoke pieces [everybody will want it that way],” Opperman said. In his desire to take time on developing the legislation, Opperman noted that “quick law is bad law”.

Furthermore, the Minister confirmed that neither the Universities Superannuation Scheme or Universities UK has approached the DWP about a CDC scheme, and noted that it has only been Royal Mail that has expressed a desire to the DWP to set up a CDC scheme.

When asked whether the government has any plans to use Nest as a vehicle to promote CDC schemes, he said that there are no current plans. However, he said he wants to wait for the Financial Conduct Authority’s retirement outcomes review before the Department makes a decision on whether they are for or against.

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