Confidence in CDC adoption remains low despite growing policy momentum, Sackers finds

Confidence that collective defined contribution (CDC) pension schemes will become widely adopted remains low, despite growing political and regulatory momentum, according to a webinar survey from Sacker & Partners LLP (Sackers).

61% of attendees were not confident collective defined contribution (CDC) pension schemes would gain significant traction. 

48% said all aspects of the model flagged by Sackers would be difficult to communicate, while 26% felt that explaining the possibility of retirement incomes falling was the hardest feature to convey to members.

Andrew Worthington (pictured), partner at Sackers, said: “The survey suggests that the biggest challenge facing CDC today isn’t necessarily the model itself but rather familiarity with how it works. 

“As a new approach for the UK pensions market, building confidence will take time, like any innovation. 

“It’s also notable that many respondents highlighted the possibility that retirement income could reduce as a key concern. In practice, retirement incomes under DC are already uncertain, fluctuating with market performance and individual decisions.”

Worthington added: “CDC has the potential to become an important third option alongside DB and DC. 

“It gives employers certainty over contribution costs while giving members the benefits of collective investment, risk pooling and the prospect of a more predictable retirement income than many individuals can achieve through traditional DC arrangements.