CDC - sharing risks between members

Collective Defined Contribution (often referred to as CDC or Collective DC) was put forward as one of the options in the November 2013 DWP consultation paper ’Reshaping workplace pensions for future generations’.

In CDC schemes, investments are pooled and the benefits received by members are dependent on the funding level of the scheme.

Like other types of pension scheme, CDC schemes can have a variety of different benefit structures and employer contributions can be fixed or potentially flexible within a certain band. Increases to pensions in payment are dependent on the funding level within the scheme, and in the extreme case pensions in payment can be reduced.

We have prepared a commentary that looks at CDC in greater detail including how it works, the benefits and the limitations.