There is strong support for collective defined contribution (CDC) offerings amongst both pension savers and employers, Hymans Robertson has said, after its research revealed a "clear appetite" for change.

The firm's report found that there is growing backing for CDC amongst UK corporate pension decision-makers, with 91 per cent of respondents stating that they are likely to consider CDC or similar schemes for their business, up from 81 per cent in 2024.

In addition to this, nearly half said they are “very likely” to do so, which Hymans Robertson highlighted as evidence of ongoing regulatory and market developments, and a shift in how employers view their role in supporting retirement outcomes

Only 1 per cent of employers said nothing about CDC would appeal to their company, demonstrating CDC’s broad appeal to offer a competitive edge, improve member outcomes and simplify retirement decisions.

There was also support from savers, as the majority (80 per cent) of the 1,000 defined contribution (DC) pension savers surveyed said they would give up flexibility to receive a higher income overall.

Some aspects of CDC were particularly popular with savers, as Hymans Robertson found that the most valued benefits of CDC were protection against running out of money
in retirement, and getting a higher overall pension from the same level of saving.

In contrast, just 4 per cent of respondents said that no aspects of CDC would appeal to them.

The report also highlighted the potential financial benefits for both employers and employees as its modelling suggested that an employer with 10,000 employees and a contribution structure of 5 per cent/ 7 per cent could increase members' pensions by approximately 13 per cent per year.

At the same time, pension costs could decrease by £3.5m annually by transitioning
from DC to CDC and adjusting their contribution structure.

“CDC is not just a technical innovation, it’s a meaningful opportunity to improve retirement outcomes for millions of people across the UK," Hymans Robertson head of DC markets, Paul Waters, said.
 
"CDC schemes deliver pensions in a way that improves adequacy and the analysis published in our latest report reinforces that view. Support for CDC is not just from members but from employers too. There is a clear appetite for change."

However, Waters emphasised that "one type of CDC scheme will not be right for every employer", stressing the need for a diverse ecosystem of CDC designs, including whole of life, decumulation only, single-employer, multi-employer and sector-based schemes.

"That diversity will be essential to making CDC scalable, inclusive and adaptable to different needs," he said, urging the government and industry leaders to actively support the development of diverse CDC models, ensuring they are scalable, inclusive and fit for the future.

"The government’s support of multi-employer CDC is a welcome step, but it must be followed by commitment and clear leadership. Government backing, whether through promotion or direct provision, would significantly boost confidence in CDC among savers," he continued.

"We urge the industry to prioritise CDC as part of a broader strategy to tackle pension inadequacy.
 
“Ultimately, CDC is about strengthening the social contract between generations. It’s about giving people a better chance of a decent retirement while ensuring the system remains fair and resilient, this can be done through thoughtful design, transparent communication and collaborative delivery.

"Now is the time to move from discussion to delivery, CDC must be prioritised in tackling pension inadequacy across the UK. If we get this right, CDC could become a cornerstone of UK pension provision for decades to come.”

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