Public skepticism lingers over CDC guidance
Confidence in collective defined contribution (CDC) pension schemes becoming widely adopted in the UK remains low, despite growing regulatory support.
A survey by law firm Sackers revealed that 61% of pension professionals doubted CDC schemes would gain significant uptake. Nearly half of respondents identified communication challenges as a major hurdle, saying the model would be difficult to explain to members.
Communication barriers dominate concerns
When asked which elements of CDC arrangements would be hardest to communicate, 26% of professionals singled out the possibility of retirement incomes falling. Uncertainty around payouts emerged as a key issue in the findings.
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Andrew Worthington, a partner at Sackers, said the results indicated the biggest obstacle wasn’t the model itself but a lack of understanding. “As a new approach for the UK pensions market, building confidence will take time, like any innovation,” he explained.
Worthington pointed out that retirement incomes under traditional defined contribution (DC) schemes are already unpredictable, shifting with market performance and individual choices. CDC schemes, he added, might offer a compromise—giving employers predictable contribution costs while allowing members to benefit from collective investment and risk pooling.
Regulatory momentum builds, but skepticism persists
The UK government has introduced measures to support CDC adoption, including potential easements for schemes considering retirement CDC as their default option. Recent changes also aim to simplify the authorisation process for new unconnected multi-employer schemes while keeping safeguards in place.
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Despite these steps, doubts remain. Worthington acknowledged that CDC schemes have worked well in other countries for years but said the UK would need continued government backing, practical regulation, and real-world examples to achieve similar results. “CDC cannot succeed through single employer demand alone,” he noted. “It requires policy leadership to build confidence and drive broader adoption.”
For now, the model remains untested in the UK. Some employers and trustees are considering CDC as an alternative to traditional pension structures, but the survey showed many remain hesitant—especially when it comes to explaining the risks to members. The challenge, Worthington said, is moving from uncertainty to trust.
Recent regulatory adjustments may help, but the path to widespread adoption appears slow. The government’s willingness to refine rules based on feedback is encouraging, though the survey suggests clearer messaging—and a few visible success stories—will be needed for CDC schemes to avoid staying a niche option.
