CDC will be misconstrued as DB – Blake

Savers will still think of collective defined contribution (CDC) systems as akin to defined benefit promises, Pensions Institute director David Blake has warned.

Speaking at the recent Longevity 14 conference, Blake highlighted that CDC has been discussed in the UK a few times in the past and has always fallen away.

“In the past 10 years we have had about three times in which CDC was actively discussed on a regular basis, before it goes back down again.

“There was a consultation in the Labour government in 2008/9, another consultation a few years ago and there is a new one now, but the years are going past and nothing is happening,” he said.

The Royal Mail has led the latest debate about CDC, with its Communication Workers Union-approved proposal for a CDC scheme with a DB lump sum alongside it. It has called upon the government to make the necessary legislative changes for them to be able to implement this structure.

According to Blake, Royal Mail is “quite determined and it has got enlightened union representatives, along with an enlightened employer, wanting to try CDC”, meaning this could be the catalyst for the start of CDC in the UK.

“But as always, I think the workers will think that this is the reintroduction of the DB guarantees model, although employers say it is not. Employers will state that in the details, and people will nod, until the time when they are told that their pension has to be cut. Then they will say that nobody told them that,” he warned.

The government has recently confirmed that it will launch a formal consultation into the first CDC pension schemes in the autumn.

    Share Story:

Recent Stories


Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios