Collective Defined Contribution schemes have become an option for housing associations

CDC schemes have the potential to transform workplace pensions by bridging the gap between defined benefit (DB) and defined contribution (DC) schemes, and combining elements of both models.  They involve pooling contributions from employers and employees into a collective fund that is professionally managed and invested on behalf of all members.  Rather than building up an individual pension pot, members build up a target pension.  In retirement, the scheme aims to provide a regular income for life, although, like a DC pension, the income can go up or down.  Its collective structure allows investment and longevity risks to be shared across the membership rather than borne by each individual.  Investment decisions are made collectively on behalf of the scheme, rather than by individual members.  Assets can therefore remain invested in growth-seeking investments for longer, supporting the potential for stronger investment returns.  Writing in Social Housing, Paul Eagles of TPT Retirement Solutions said that CDC schemes should produce a higher and more predictable income for pensioners by pooling risk.  It also seeks to provide a more attractive scheme to help employers with recruitment and retention, without the cost risks associated with DB schemes.