DWP’s consultation on extending opportunities for CDC schemes

With growing industry interest in extending the CDC regime beyond single and connected employer schemes, the DWP has just finished consulting on opportunities for:

• non-connected multi-employer CDC schemes, and
• decumulation-only CDC schemes, ie where individuals only transfer into the scheme at retirement to take their benefits.

Non-connected multi-employer CDC schemes would offer opportunities to both commercial providers and to industry-wide schemes.  The consultation puts forward the possibility of introducing greater flexibility into the CDC regulatory regime which, depending on how it is ultimately framed, could come with extra risk.  But balancing the interests of potential providers, as well as members, will be essential if these schemes are going to be a success.

The DWP’s views on decumulation-only CDC schemes are at a much earlier stage.  Whilst this promises to be an exciting development, we agree with the DWP’s approach of taking things a bit slower, as the key will be to understand at the outset whether and how these schemes will be commercially viable.

You can read our full response here.