TPT Retirement Solutions is designing a new multi-employer collective defined contribution (CDC) pension scheme, which it expects to launch by the end of next year.
Following pensions minister Torsten Bell’s announcement last month that legislation enabling multi-employer CDC schemes – sometimes referred to as “Dutch-style” – will be introduced to Parliament in the autumn, TPT said it is “embracing the opportunity for innovation” with plans to launch its own CDC scheme.
CDC pensions are a new style of scheme designed to bridge the gap between defined benefit (DB) and defined contribution (DC) schemes. It aims to offer members a higher and more predictable retirement income than DC schemes and remove the risk of unexpected employer costs compared to DB schemes.
Multi-employer CDC pensions
CDC pensions outperform DB and DC schemes
Research by Willis Towers Watson in 2020 found that CDC schemes could deliver annuities on average 70% higher than DC schemes and 40% higher than DB schemes.
TPT’s announcement follows a consultation on draft legislation, which closed in November, to allow CDC schemes across multiple employers, and the launch of the UK’s first single-employer CDC scheme by Royal Mail in October.
TPT is the first provider to declare its intention to enter the multi-employer CDC pensions market. In parallel, it will develop bespoke single-employer CDC schemes for larger businesses seeking tailored solutions.
Andy O’Regan, chief client strategy officer at TPT, said: “Making CDC accessible to all employers, regardless of size, is a significant step forward for the industry. For interested employers, offering a CDC scheme could become a powerful tool for talent attraction and retention.”
David Lane, chief executive, said: “The pensions industry is at a point where innovation is critical. We believe there is a clear opportunity for CDC schemes to fill a gap in the pensions market and could be the right solution for many employers and scheme members.”
Last month, Bell said: “Success in the world of pensions isn’t just about getting people saving, it’s ensuring their savings work as hard as possible for them. Making sure more employers and savers have the option of an innovative collective defined contribution pension scheme is an important part of making that happen.
“Too often at present, we are leaving individuals to face significant risks about how their individual investments perform and how long their retirements last. Pooling some of those risks will drive higher incomes for pensioners and greater investments in productive assets across the economy.”
TPT plans to gain authorisation for its multi-employer CDC scheme by the end of 2026.
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