8th July 2014

Scottish Life: Collective Defined Contribution

We take a look at what it is, how it works, and will it take hold in the UK?

In line with the Pensions Minister's ambition to reinvigorate workplace pensions, the Queen's speech laid the foundations of a new type of pension scheme, called Collective Defined Contribution (CDC).

But what exactly is CDC, how does it work, and will it take hold in the UK?

What is CDC?

In general terms, CDC schemes are huge defined contribution schemes that are sponsored by employers within a particular industry or group. For example, a CDC scheme could be designed for people who work in the construction industry, or are members of a particular trade union.

Contrary to what some people believe, there are no guarantees in CDC schemes, just an aspirational target pension. Any increases to pensions in payment are similarly not guaranteed. All the benefits are paid from a big pool of money.

To read the full article from Jaime Clark, Business Development Manager at Scottish Life, visit our website.

Retirement, Pensions