Understanding how CDC might work in the UK, how the best outcomes can be achieved for members, and what the technical and legislative barriers are to achieving these outcomes.

A collaborative project between the Pensions Policy Institute (PPI) and King’s College London (KCL), funded over two years by the Nuffield Foundation, investigating the implications of how CDC is envisioned to work in the UK.

CDC has recently become reality in the UK, with the Royal Mail opening its own single employer CDC scheme in late 2024. In a pensions landscape where DB is declining and concerns remain about the adequacy of DC pensions, CDC could offer a third option which could provide higher returns and longevity protection to members, while also being feasible for employers.

The foundations for CDC in the UK have already been laid. We already understand a lot about how CDC must work in the future, from existing and proposed legislation. However, single employer CDC legislation still leaves many important decisions for scheme designers to make, and many believe that in the future, the bulk of CDC may exist in other forms such as multi-employer, which is not yet defined by legislation.

This project examines the implications of the UK’s version of CDC, modelling the outcomes of single and multi-employer schemes, and exploring the implications of the design choices available in the UK. This includes issues around fairness, cross subsidy, and investment choice, for which we discuss potential solutions.