A large majority of UK pension professionals (79 per cent) believe now is the time to investigate the role of collective defined contribution (CDC) schemes, according to polling from an LCP webinar held this week.

The session, which attracted more than 100 attendees, found that 79 per cent of respondents viewed it as either very or quite important for sponsors, defined contribution (DC) trustees and other stakeholders to begin exploring the role CDC could play in improving saver outcomes.

The discussion comes as the regulatory framework for CDC continues to expand, with recent consultations and legislative changes paving the way for “retirement-only” CDC models expected to launch in 2027.

LCP noted that these developments mean all DC trustees are likely to be required to assess CDC as a potential option for their members in future, while employers are also expected to take a closer interest as they consider CDC’s role in wider reward and benefits strategies.

Indeed, when attendees were asked to identify the single most important element of a good-quality pension scheme, 80 per cent chose member outcomes.

Ease of retirement planning (7 per cent), ease of communication (6 per cent), and fairness and flexibility (each 4 per cent) followed.

Consequently, LCP urged sponsors and trustees to assess which of these characteristics they prioritise most for their membership base, stressing that this should guide decisions about scheme design and the suitability of CDC.

Polling also revealed a strong sense of urgency about beginning that assessment.

Thirty-six per cent of respondents said it was very important to start investigating CDC immediately, while 43 per cent said it was quite important.

Only 3 per cent felt it was not important.

Echoing previous comments, LCP stressed that with appropriate design and governance, CDC schemes have the potential to materially improve expected retirement outcomes by providing a more stable income than standard DC, without the employer liabilities associated with DB.

Indeed, research from the Pensions Policy Institute (PPI) and King’s College London (KCL) recently found that a redesigned CDC pension model could deliver retirement outcomes up to 75 per cent higher than traditional DC schemes.

However, LCP warned that future regulatory developments may require DC trustees to consider CDC as an accumulation-phase option.

The firm added that employers may also need to review whether their current arrangements meet the needs of different saver groups - for example, CDC may appeal to moderate earners seeking predictability, while traditional DC may continue to suit those with larger pots who value flexibility.

During the webinar, speakers discussed the model's potential and suggested that CDC’s long-term success will depend on addressing challenges related to fairness, transparency, and intergenerational risk-sharing.

LCP head of CDC, Steven Taylor, said the polling underlined that “member outcomes are the ultimate benchmark for success”.

He noted that CDC could offer low- and moderate-income savers the security of a predictable retirement income “without the complexity of managing investments”, while DC continues to provide flexibility for those who prefer it.

“Trustees and employers now need to ask: what matters most to your savers - certainty or choice?” he added.

Meanwhile, LCP partner, Helen Draper, argued that the biggest hurdles for CDC relate to “fairness, transparency and trust”, stressing that strong governance and clear communication will be central to its success.

“Designing these schemes means balancing risks across generations and ensuring resilience against economic shocks,” she stated.

“If members don’t understand the benefits, the model won’t succeed. As more schemes explore CDC, getting these fundamentals right will be critical.”

This article was first published on our sister title, Pensions Age.

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