The pension schemes of thousands of expatriates could get a welcome boost with ongoing consultations on how collective defined-contribution pension schemes could be extended to more savers.
Ideas on how collective defined contribution (CDC) pension schemes could be extended to more savers were explored with industry partners today, March 28, by the Minister for Pensions.
Pensions Minister Guy Opperman explained how the regulations will come into effect on August 1 and discussed ways to move the next phase of the CDC schemes forward with a consultation scheduled for later this year.
The Minister said: “CDC schemes have the potential to transform the UK pension landscape and deliver better retirement outcomes to millions of savers.
“I strongly believe that we should capitalize on the growing enthusiasm to expand the CDC to other types of pension plans, such as multi-employer plans and Master Trusts,” he said during a meeting. a forum of the Royal Society of Arts (RSA).
David Pitt-Watson and Hari Mann, co-chairs of the RSA’s CDC forum, said: “People saving for a pension generally want to secure an income that will last them until they die, not just to receive a check to their retirement. . This is what CDC pensions are designed to do.
“The government is to be commended for creating regulations that allow everyone to benefit from well-managed CDC plans. Evidence suggests it can transform the retirement of millions of people.
The CDCs operate through employers and employees who contribute to a collective fund from which individual retirement income will be drawn.
These group funds can be invested in so-called “higher yielding assets” over a longer period than traditional DC plans, which benefits the growth of the fund and its members.
Currently, regulations provide for single-employer, connected CDC plans.
Some parties have already expressed interest in pursuing CDC multi-employer plans as an offering for their members, as well as proposed Master Trust and CDC models that only offer “skimming” (when retirement savings is converted into retirement income).
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