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CDC pensions

Collective Defined Contribution (CDC) pensions represent an exciting evolution in workplace pensions, offering greater choice and flexibility for employers who want to match retirement provision to the diverse needs of their workforce.

We're proud to lead the way as the first provider to announce plans for a multi-employer CDC pension scheme.

What is a CDC pension?

A CDC pension is a new style of pension scheme designed to bridge the gap between Defined Benefit (DB) and Defined Contribution (DC) schemes.

It has the potential to offer members a higher and more predictable retirement income than Defined Contribution schemes and take-out the risk of unexpected pension-related costs for employers compared to DB schemes.

TPT is the first pension provider to announce the development of a multi-employer CDC solution, aiming for launch in 2027.

Andy O'Regan

Chief Client Strategy Officer, TPT

How it works

Unlike a DC scheme, a CDC scheme provides a whole-life pension income to members.

The contributions employers and members pay are fixed and pooled into a collective fund. By pooling investment and life expectancy risk amongst the membership, a CDC pension is expected to generate higher* returns than an individual DC scheme resulting in higher expected benefits.

Annual increases to benefits depend on the performance of the scheme. This removes the possibility of the employer having to plug a funding gap.

 

* Source: TPT modelling 2026. Outcomes are not guaranteed.

Transcript

Hi, I am Andy O'Regan, the Chief Client Strategy Officer at TPT.

Today I want to talk to you about a game changer for the pensions industry that's Collective Defined Contribution or CDC pension schemes.

You may be aware that Royal Mail launched the first CDC scheme in October, 2024.

This new type of pension arrangement is designed to combine the best features of traditional defined benefit and defined contribution plans, offering tangible benefits to both employers and pension scheme members.

The government has consulted on regulations which will make CDC available to any employer of any size in a cost effective way.

TPT is now actively exploring the development of a CDC scheme.

We are opening up our diaries from January, 2025 to have initial conversations with interested employers.

These meetings are designed to capture valuable feedback from you and help us to shape our offering by taking 30 minutes to have a conversation with us.

You'll get early insight into the CDC framework and its advantages.

CDC schemes combine the best features of traditional pension arrangements, an income in retirement for the pension scheme members, similar to defined benefit and the predictability in contributions for the employers similar to defined contribution schemes by pooling risks.

It is expected that CDC schemes can deliver better outcomes for pension scheme members than DC without increasing the cost for employers.

Please book a 30 minute meeting with us to discuss how CDC can benefit your organisation and your workforce.

We look forward to the opportunity to discuss CDC with you and how we can make pension schemes perform better for everyone.

Many thanks for your time and look forward to speaking to you soon.

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Transcript

Introduction

Hello and welcome to the latest Professional Pensions webinar on the next steps for multi-employer CDC. This discussion is held in association with BlackRock and TPT Retirement Solutions.

Late last year, the government finalised the regulatory framework to enable whole-of-life multi-employer CDC schemes, allowing CDC to expand beyond single or connected employers. Legislation is expected to come into force on 31 July, with applications opening shortly after.

The first multi-employer CDC schemes could be up and running in 2027. This webinar explores how CDC will work in practice, the outcomes it could deliver, and the benefits for both employers and members. It also covers governance, investment opportunities and lessons from international markets.

00:03:36 – Introductions

Matthew Delaney (BlackRock)
Managing Director within BlackRock’s institutional business, focusing on developing pension solutions in response to regulatory change, including CDC.

Paul Eagles (TPT Retirement Solutions)
Head of CDC activity, focused on bringing a multi-employer CDC scheme to market, targeting launch in 2027.

Chintan Gandhi (Aon)
Partner and Head of CDC, working with employers, trustees and providers to shape CDC strategies.

Joanna Sharples (Aon)
Responsible for investment strategies, including default investment approaches and how they apply to CDC.

00:04:20 – What is CDC and how does it work?

CDC (Collective Defined Contribution) aims to provide a target income in retirement—an income for life generated from pooled contributions and investment returns.

Members do not need to make complex retirement decisions. Instead, pensions are adjusted annually based on:

  • Investment performance
  • Inflation
  • Life expectancy

In most cases, pensions are expected to increase over time, although reductions may occur in extreme market conditions.

00:06:06 – International experience and key learnings

CDC has been widely used across Europe for decades. The UK model has incorporated several key lessons:

  • A DC-based framework with no ongoing employer liability
  • Minimising cross-subsidies between employers and members
  • Annual valuations to avoid surplus or deficit build-up

00:08:18 – Benefits of CDC

For members:

  • Income for life (reduced risk of running out of money)
  • No need to make complex financial decisions at retirement

For employers:

  • Fixed contribution costs
  • No additional liabilities
  • Stronger employee value proposition for attraction and retention

CDC is expected to deliver improved outcomes compared to traditional DC, driven by long-term investment and risk pooling.

00:10:45 – Key challenges

The main challenge is education and understanding.

Employers and members need to understand:

  • How CDC differs from DC and DB
  • That outcomes are target-based, not guaranteed

Communication is critical, particularly at the early stages.

00:12:29 – Early evidence and proof points

The Royal Mail CDC scheme provides an early UK example. Its first valuation delivered a positive benefit adjustment, helping to demonstrate that CDC can work in practice and build confidence in the model.

00:13:15 – Managing risk and pension adjustments

Pension reductions can occur, but typically:

  • They are smaller than wider market declines
  • They happen during broader economic downturns

In most years, outcomes are expected to be:

  • Slightly above inflation, or
  • Below inflation, rather than outright cuts

Clear upfront communication is essential to set expectations.

00:16:00 – Employer adoption

CDC is gaining interest due to:

  • Lack of future employer liability
  • Potential for better retirement outcomes
  • Simpler member journey

Employers across sectors are already exploring adoption, with early movers helping to build market momentum.

00:18:00 – Implementation journey

Typical implementation includes:

  1. Internal governance approval
  2. Regulatory authorisation
  3. Employer onboarding (2–3 months)
  4. Member communications and setup
  5. Transition and asset transfer

00:20:12 – Investment strategy

CDC schemes enable:

  • Longer-term investment horizons
  • Greater allocation to growth assets (e.g. equities, private markets)
  • Reduced need for daily pricing and liquidity constraints

Over time, portfolios evolve to include more defensive assets as members enter retirement.

00:27:18 – Governance considerations

Key governance priorities include:

  • Fair treatment of all members
  • Strong actuarial oversight
  • Clear risk management frameworks
  • Monitoring the impact of new employers joining

Governance structures must support scalability and consistency.

00:32:14 – TPT approach

TPT is developing a multi-employer CDC scheme targeting:

  • Launch around 2027
  • Improved member outcomes
  • Reduced reliance on individual decision-making

Employer demand and engagement are key drivers behind the initiative.

00:34:15 – Costs vs DC

CDC operates within the same charge cap framework as DC schemes (0.75%).

While cost structures are similar, the focus shifts toward value delivered, particularly in terms of retirement income.

00:39:39 – CDC vs DC master trusts

CDC is expected to complement, not replace, DC.

Potential model:

  • CDC for core retirement income
  • DC for flexibility and additional contributions

This creates a more balanced approach for members.

00:50:11 – Retirement CDC

Retirement-only CDC is expected to be introduced through upcoming regulation.

It allows members to:

  • Convert DC savings into an income for life
  • Avoid complex decisions in retirement
  • Target income that keeps pace with inflation

This aligns with the move toward guided retirement solutions.

00:54:33 – Final takeaways

  • CDC has the potential to improve member outcomes without increasing employer costs
  • Early adopters will drive market confidence
  • Strong governance, communication and delivery will be critical
  • Over time, CDC could become a mainstream part of UK pensions

Webinar: What’s next for CDC

Multi-employer CDC is moving from concept to reality.

In this Professional Pensions webinar, TPT’s Paul Eagles joins industry leaders from BlackRock and Aon to discuss governance, implementation and the growing employer appetite for CDC.

CDC panel discussion

With legislation in place and schemes able to apply for authorisation from mid‑2026, CDC pensions are moving closer to becoming a mainstream reality.

In this panel discussion highlights video from the TPT Conference in March 2026, industry experts explore the current position for employers and providers, and what a multi‑employer CDC approach could look like in practice for members.

You can view the panel session in full here.

Panellists: Andy O’Regan (TPT), Muntazir Hadadi (First Bus), Alison Hatcher (Vidett) and Laun Middleton (LCP).

Transcript

I think CDC is actually one of the more exciting innovations I've seen in my career. I think looking at it, we've touched on member outcomes as being a key driver for it, which on its own is enough. But alongside that, you have no additional boundary risk for the sponsor. You actually reduce the burden of decision making on the member.

And as we talk about long term assets, it's a line of the Government's productive finance initiative. And so to me, this is something which is being designed in the place of knowledge underlying to so many things that you need in pensions. I think the big opportunity for an employer is to improve the outcomes. There's a lot of employers can't really afford to increase their contribution levels.

It's very expensive to do so, particularly for large employers. So if I can offer my board increasing member outcomes for the same cost, it's almost a no brainer, especially to change the dial. I would say be open minded. There are so many options as innovation, and we want to create a market where there is choice, and if we pre-empt or discount anything, then I think we're not taking advantage of the opportunity we have today that could greatly benefit members.

And so my thing would be open minded. The only way we actually improve and create change is by embracing innovation. There's a lot of engagement and I think doing continuing to do things like this will really, really help because what we're looking for is to, submit a scheme for authorisation this year and launch a Multi-Employer CDC scheme next year, which is really exciting, really innovative.

But we're seeing the demand for it. There's a lot of employers want to talk to us about it. This is really exciting time for the pensions sector at the moment.

Group of employers in a meeting

The benefits of CDC

CDC - the best of both worlds

Download our flyer below to see how CDC pension schemes are bridging the gap between Defined Benefit (DB) and Defined Contribution (DC) pensions.

I am delighted to see TPT confirming plans for a multi-employer CDC scheme, just days after I set out the timeline for new legislation to enable these new types of pension schemes.

Torsten Bell MP

Minister for Pensions, May 2025

Meet our trustees

We’ve appointed a highly experienced board of trustees to lead our multi-employer CDC scheme.

Hear more from our trustees and how they will bring their insight and expertise to help build this exciting new model.

Transcript

Hi, I'm Andy O'Regan, Chief Client Strategy Officer at TPT, and I'm delighted to unveil our newly appointed independent and highly experienced CDC trustee board. As the first provider to announce our intention to launch a CDC multi-employer scheme, we're proud to be at the forefront of pension innovation and the diverse expertise that our trustees bring will help create that solution and also provide rigorous oversight and governance.

So let's meet the trustee board. Kim, could you please introduce yourself?

Thanks, Andy. I'm Kim Nash. I'm the Chair of the Trustee Board. I'm Managing Director of Zedra and a qualified actuary. I've been a professional trustee for over 10 years, working with DC Schemes, DC Master Trusts, as well as DB.

So Kim, how do you think the CDC could fit in the market and what are the opportunities?

From a trustee perspective, we're really focused on member and member outcomes. So really excited to see CDC as another option that's available to employers. I think this gives much better flexibility to be able to provide retirement solutions that meets members' needs.

Thanks, Kim. Over to Alison. Could you introduce yourself?

Absolutely. I'm Alison Hatcher. I am the Head of Trusteeship at Vidett. I hold a number of executive and non-executive positions as well as trustees. I am on the board of Islington and Hackney Housing Association and also the University of Warwick Council, so the university sector as well.

Alison, what do you see some of the challenges of formulate an investment strategy for a CDC pension scheme.

So for us trustees, we need to focus on creating strong returns that are aligned with member benefits, both the younger and on an older generation. So we manage intergenerational fairness, but we also need to make sure that we are managing the volatility within the portfolio. We need to create stability so that benefits aren't impacted in the longer term, which would then erode the member confidence in the CDC scheme.

Venetia, please could you introduce yourself?

Hi, I'm Venetia Trayhurn. I'm a partner at Falcon Trustees. I'm an independent trustee with a legal background and I currently chair the first authorised CDC scheme in the UK with Royal Mail.

And what about the communications with members? What do you see as the challenges for the communication?

It's really important that members understand that they're building up a target pension, but the actual amount that's built up and paid out each year in retirement will be calculated annually and could go up and down. So it's not a guaranteed amount. But we think that CDC can play a significant role in enhancing member retirement savings. It's going to be really important that communications are clear and effective.

Great. thank you everyone, and we look forward to sharing more with you as we develop the solution and we continue to build that momentum.

Talk to our team

Interested in learning more about CDC? Speak to our specialists about the opportunities, considerations and potential benefits of a Collective Defined Contribution pension scheme.

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CDC Podcasts

The following podcasts feature Andy O’Regan, TPT’s Chief Client Strategy Officer, and cover the growth of CDC pension schemes.

FAQs

  • What is a CDC pension and what are the benefits?

    A CDC pension aims to provide a target pension income for life, rather than building up an individual pension pot. By pooling investments and sharing risks across members, CDC schemes can invest for the long term and aim to deliver higher* and more predictable retirement incomes than individual defined contribution (DC) pensions.

    Unlike a DB pension, benefits are not guaranteed and may go up or down depending on how the scheme performs.

     

    *Source: TPT modelling 2026. Outcomes are not guaranteed.

  • Can an employer offer a CDC pension scheme if it already has a DB or DC scheme?

    Yes. Employers can offer a CDC pension scheme whether they already have a DB pension, a DC pension, or both. CDC can sit alongside existing pension arrangements as an additional option.

  • What is the risk of a funding deficit in a CDC scheme?

    There is no funding risk for the employer. The funding position of a CDC scheme will be assessed annually by the Scheme Actuary. If the assessment identifies that the assets in the scheme are lower than the value expected to be required to meet future benefits, then the targeted level of future pension increases will be adjusted accordingly. No deficit can occur so no deficit contributions will be payable. 

  • Will members be able to take income drawdown from a CDC pension at retirement?

    No. CDC schemes are designed to provide a target pension income for life, so drawdown is not available within the scheme. Members who want drawdown or more flexibility may be able to transfer the value of their CDC benefits to another pension arrangement, subject to the scheme rules and legislation.

  • Will salary sacrifice be available within a CDC pension scheme?

    Yes. Employers can offer salary sacrifice, subject to their payroll arrangements and applicable tax and legal requirements.

  • How will pension benefits be paid from a CDC pension scheme? Will members need to buy an annuity?

    No. Members' pensions will be paid directly from the CDC scheme throughout retirement. They will not need to use a pension pot to buy an annuity or another retirement income product.

  • Can members take a tax-free cash lump sum from a CDC pension scheme?

    Yes. We will offer members the option of a tax-free cash lump sum when they retire. In exchange for the lump sum, part of their CDC pension will be given up.

  • Could members transfer existing pension savings into a CDC pension scheme?

    Yes. Within our proposed scheme, members will be able to transfer pension savings from other DB or DC pension arrangements into our CDC scheme. The transfer value would be used to provide an additional target pension within our CDC scheme, rather than being held in an individual pension pot.

  • Will members be able to make additional voluntary contributions (AVCs)?

    Yes. Within our proposed scheme, members will be able to pay AVCs into a CDC pension scheme. Any AVCs paid would increase the target pension they build up within the scheme.

  • In the event of death, what benefits may be paid?

    Benefits paid will depend on the member's circumstances and the options they have chosen. 

  • How are pension benefits and increases calculated?

    A CDC scheme aims to provide a pension in retirement and annual increases. However, these are not guaranteed. Each year the scheme reviews its financial position, and pensions may increase, decrease or stay the same.

  • How will contribution levels be set?

    Contribution levels are set by the employer. Many employers may choose to use the same contribution rates as their existing DC scheme, provided they meet automatic enrolment requirements.

  • How does legislation influence CDC pensions?
    • The Pension Schemes Act 2021 created the legal framework for CDC pensions and gives The Pensions Regulator (TPR) responsibility for authorising and supervising CDC schemes.
    • Regulations introduced in 2025 extended this framework to allow CDC schemes to be offered by groups of unconnected employers through multi-employer arrangements.
  • Does the Pension Schemes Bill cover CDC pensions?

    The legal framework for CDC pensions is already set out in the Pension Schemes Act 2021 and related regulations. The Pension Schemes Bill does not create CDC pensions, but supports the Government's wider plans to improve pension outcomes for savers.

  • What is The Pensions Regulator’s role in CDC pensions?

    The Pensions Regulator (TPR) authorises, supervises and regulates CDC pension schemes in the UK. Its role is to help ensure CDC schemes are well run, transparent and operated in members' interests.

Important information

TPT's proposed multi-employer Collective Defined Contribution (CDC) pension scheme remains subject to regulatory authorisation. The information on this page is provided for general information purposes only and relates to the current proposed scheme design. References to scheme features or benefits should not be taken as confirmation that the scheme has been authorised or that all features described will be available in their current form.

CDC benefits are not guaranteed. A CDC scheme aims to provide a target pension income and increases in retirement, but benefits may increase, decrease or remain unchanged depending on the financial position of the scheme and other relevant factors.

Any references to expected outcomes, retirement income, potential benefits or comparisons with other pension arrangements are based on assumptions, modelling or proposed scheme design features and should not be relied upon as guarantees of future performance or benefits. Individual outcomes will vary.

The availability of features described on this page, including transfers, AVCs, retirement options and death benefits, will be subject to the final scheme design, governing documentation, applicable legislation, regulatory requirements and the outcome of the authorisation process.

Nothing on this page constitutes financial, investment, tax or legal advice. Individuals should consider obtaining appropriate professional advice before making decisions about their pension arrangements.