Marvin OnumonuLifeSight, WTW’s £30bn defined contribution (DC) master trust, has confirmed plans to launch a retirement collective defined contribution (R-CDC) solution as soon as UK regulation allows.
The scheme will sit alongside existing retirement options and aims to help members turn their DC savings into a steady income during retirement.
Jelena Croad, head of LifeSight UK, said: “We believe Retirement CDC will be the best option for the majority of DC members reaching retirement who want the highest sustainable lifetime income from their pension pot.
“R-CDC does this without putting the burden of managing pensions decisions onto the member.
“This is why we intend to offer R-CDC as soon as legislation allows.”
Croad added: “We are excited to introduce R-CDC in LifeSight, which would be a first in the UK, as part of our range of retirement options.
“This aligns with our long-standing commitment to innovation, and our ambition to provide members with better retirement outcomes.
“We also believe R-CDC will play an important role for those members who don’t want to make active decisions with their retirement savings in later life. We see R-CDC as a key part of Guided Retirement.”
Simon Ellis, chair of trustees at LifeSight, said: “Member outcomes are at the heart of all trustee decisions.
“It is very exciting and satisfying that LifeSight is leading innovation in this area, by offering a range of new solutions to members which are expected to address the significant challenges facing DC retirees.”
The R-CDC scheme will let members convert their DC savings into an income for life.
Income levels will be adjusted over time based on collective investment performance, longevity experience and expectations of the future.
An independent actuary will calculate adjustment rates based on assumptions set by trustees and supervised by the expanded TPR code of practice.
The Government plans to publish draft R-CDC regulations this year, with final regulations and TPR authorisation expected in 2027 or 2028.
When LifeSight members retire, they will be able to choose from R-CDC, ‘Flex and Fix’ and current DC options such as cash, annuities or drawdown.
Research from WTW found that R-CDC produces a higher lifetime income than other DC retirement options in most cases.
LifeSight expects to make these retirement options available to its own members and those in single-employer DC trusts that partner with LifeSight for retiring members.
Pensions Minister Torsten Bell, said: “Retirement CDC offers hardworking people who have spent decades saving in a DC scheme a different option for their retirement.
“One where risks are shared, returns are more predictable, and the focus is on securing a reliable income for life.
“Alongside our wider pension reforms which will drive costs down and lift workers’ retirement saving returns up, Retirement CDC is a significant step towards helping millions of people get the security they deserve in later life.”
Rash Bhabra, head of UK retirement at WTW, said: “LifeSight’s plans to launch R-CDC build on WTW’s deep experience and leadership in the UK’s development of CDC pensions.
“WTW advised Royal Mail on the development of their CDC scheme, the first of its kind in the UK, and currently serve as scheme actuary to the Royal Mail Collective Pension Plan.
“We are pleased the Government continues to be supportive of CDC, and sees this as an area where pension schemes can support the UK’s economic growth and bring benefits to UK workers.”
Bhabra added: “We look forward to continuing to work with Government to bring to life the vision of CDC pensions for DC savers.”
