Pension professionals believe collective defined contribution (CDC) pensions can be made simple enough to catch on, but their success will depend on addressing the risks and trade-offs, achieving scale, and getting schemes up and running quickly.

Speaking during a panel session at the Pensions UK Annual Conference, Sackers partner, Jacqui Reid, said the industry must be “really cognisant” of CDC's risks and trade-offs.

However, she believed it will become a mainstream benefit in the not-so-distant future.

Kingfisher pensions director, James Chemirmir, agreed that CDC will catch on, but argued this would not necessarily be because it could be made simple, but instead because the size and urgency of the UK’s retirement income adequacy problem means the industry must make it work.

Trades Union Congress policy lead, Jack Jones, also agreed that CDC could address the adequacy problem and provide what people want from their pensions.

“It is a difficult job to design it and make sure it works, but from the members' perspective it is what they want from their pension,” Jones said.

“We are starting with a blank sheet of paper for CDC, and it is more straightforward to design something that delivers the outcomes that we want, and it is simpler than starting with a defined contribution system which is not adequate, but which is embedded.

“Pensions are always going to be complicated machines, but we have an opportunity to make it simpler when you are starting from scratch rather than trying to adapt something which is not really appropriate.”

Asked what a critical success factor for CDC would be, Reid pointed to achieving scale and getting schemes up and running quickly.

“It’s also about being aligned on the trade-offs whether you are a trustee, proprietor, or employer, because I think that is a critical success factor,” Reid argued.

Chemirmir argued that the industry needs more established CDC schemes that prospective adopters can engage with and compare, enabling them to identify the model that best suits their needs.

Jones, meanwhile, said a universal CDC provider could be a “real gamechanger” and move the market much more rapidly than it is currently.

A poll of conference attendees found that 76 per cent viewed better outcomes for members as CDC's main attraction, while 8 per cent said its appeal was its attractiveness for employers as part of a benefits package.

Seven per cent cited greater simplicity for members at retirement, while 5 per cent said CDC was too complicated and would not catch on. The remaining 4 per cent said they did not know.

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