Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Latest NewsDepartment for Work and PensionsTrade unionsPensions

‘Historic’ CDC pensions schemes given green light by DWP

by Rob Moss 6 Nov 2018
by Rob Moss 6 Nov 2018 Grant Falvey/LNP/REX/Shutterstock
Grant Falvey/LNP/REX/Shutterstock

The Department for Work and Pensions has launched a consultation to shape new legislation around collective defined contribution pension schemes, as pioneered at Royal Mail, a moved described by unions as “very important development in social history”.

Under government proposals, CDC pension schemes will have an annual independent valuation to ensure that members are protected and schemes remain sustainable.

Furthermore, the DWP is consulting on how schemes can best communicate with members to ensure they understand the risk that their benefits could go down as well as up, even when they are drawing their pension.

A very important development in social history” – Terry Pullinger, CWU

Pensions minister Guy Opperman said: “CDC pension schemes are an important innovation which will provide more choice and flexibility for pension scheme members and employers.

“I’m grateful to Royal Mail and the Communication Workers Union (CWU) for their assistance in getting us to this point. It is important we get this right which is why we’re consulting on the detail of our proposals before bringing legislation forward.”

Until recently there was not much impetus from government or the private sector to push through the new legislation needed to bring these CDC pension – also known as “Dutch style” or “defined ambition” schemes – into effect.

But earlier this year, Royal Mail Group and the CWU reached agreement to introduce a CDC scheme subject to the necessary regulation being introduced.

Terry Pullinger, deputy general secretary for postal workers at the CWU, said the introduction of a CDC pension scheme for 141,000 workers at Royal Mail will be a “very important development in social history”.

Understanding CDC pensions

CDC pensions: Could going Dutch be the future?

Reacting to the “green light” from government, he said the CDC pensions could provide “genuine hope for an occupational wage in retirement pension running alongside their state pension.”

“Collective defined contribution pension schemes are an important innovation which will provide more choice and flexibility for pension scheme members and employers,” added Opperman, explaining that the consultation would “hear the views of the pensions industry as we prepare to introduce CDC pension schemes.”

Jon Millidge, chief governance and risk officer at Royal Mail Group, said: “We are delighted that the government has launched a formal consultation on enabling CDC pensions in the UK… As the provider of around one in every 190 jobs in the UK, Royal Mail is committed to delivering the best possible pension arrangements for our people.

“We believe CDC is a progressive option which meets our objectives of providing sustainable, affordable and secure future retirement arrangements. Royal Mail and the CWU want to see CDC become a reality in the UK, and we hope the required legislation will be introduced at the earliest opportunity.”

Simon Eagle, director in Willis Towers Watson’s retirement business, said: “For most employers these days an absolute red line on pension design is that their costs are fixed in advance, with no balance sheet impact or unwelcome surprises.

“CDC delivers that, but combines it with potentially higher and more stable expected pensions for employees than typical individual defined contribution (DC) arrangements, especially where pots are used to purchase annuities at retirement.”

Willis Towers Watson has worked with Royal Mail Group and Eagle said that CDC can be a viable pension provision option for a number of UK employers.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

“Royal Mail has committed to be the ‘first mover’ in the UK on CDC. Its pioneering design is different from the types of CDC scheme seen in the Netherlands and Canada.

“We expect some other employers will want to have a proper look at CDC now the government is showing its hand. The next movers are likely to be other companies who, like Royal Mail, find the costs of their defined benefit pension schemes becoming unaffordable, but who believe their employees would prefer a collective arrangement providing them with pensions in retirement to individual DC pots.”

Rob Moss

Rob Moss is a business journalist with more than 25 years' experience. He has been editor of Personnel Today since 2010. He joined the publication in 2006 as online editor of the award-winning website. Rob specialises in labour market economics, gender diversity and family-friendly working. He has hosted hundreds of webinar and podcasts. Before writing about HR and employment he ran news and feature desks on publications serving the global optical and eyewear market, the UK electrical industry, and energy markets in Asia and the Middle East.

previous post
No additional right-to-work checks for EU citizens needed, minister confirms
next post
Stress causes loss of sleep for nearly half UK workforce

You may also like

Jobcentres battle with shortage of work coaches

31 Mar 2025

Spring Statement: no relief on employers’ tax hikes

26 Mar 2025

Benefit claimants unable to work double in number

19 Feb 2025

Get Britain Working: DWP unveils employment support reforms

26 Nov 2024

Lifetime provider model for pensions scrapped

28 Oct 2024

Older workers with health conditions face ’employment gap’

14 Oct 2024

DWP fleshes out welfare reform plans

24 Jul 2024

Government launches Back to Work plan to tackle...

11 Jul 2024

Labour ministers begin work on employment issues

8 Jul 2024

Deaf man awarded £50k after Jobcentre failures

28 May 2024

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+