Boosting retirement outcomes and improving the member experience are the opportunities that most excite sponsors and trustees about CDC

More than half of respondents to a recent LCP webinar poll said the biggest attraction of Collective Defined Contribution (CDC) pensions is their potential to improve member outcomes and the retirement experience without increasing employer pension spend.

The poll, conducted during LCP’s webinar “As CDC enters the mainstream, is your pensions offering keeping pace?”, found that 29% of respondents were most excited by CDC’s ability to significantly improve retirement outcomes for an existing pension spend, while a further 25% highlighted its potential to improve the retirement experience for DC savers.

Elsewhere, 24% identified the launch of Retirement CDC schemes as the most exciting development, 17% pointed to the launch of Whole-of-Life CDC schemes and 3% cited CDC as a potential use of DB surplus.

The findings come as the CDC market enters a new phase. Following the launch of the Royal Mail CDC scheme, regulations for multi-employer CDC schemes are due to come into force on 31 July 2026, while the development of Retirement CDC solutions is expected to play an increasingly important role in the emerging push to improve decumulation via “Guided Retirement.”

A second poll explored what would encourage organisations to engage more actively with CDC. The largest proportion of respondents (41%) said they wanted to hear more from those designing commercial CDC products. Nearly a quarter (24%) wanted additional guidance from government and regulators, while 16% said greater familiarity with UK CDC benefit design would help. A further 14% wanted to see more examples from early adopters and 6% said a clearer regulatory deadline would be most effective.

LCP believes one of the most significant developments is the emergence of Retirement CDC. Rather than focusing solely on the accumulation of pension savings, Retirement CDC aims to help members convert DC pots into a managed retirement income, providing greater support for those navigating retirement decisions, especially to those who most value a regular income in retirement, such as private renters.

LCP outlines five key steps for organisations considering CDC

1. Review existing pensions strategies and assess whether members' retirement needs are likely to be met as planned.
2. Understand potential CDC outcomes and compare them with existing pension arrangements.
3. Decide whether CDC is right for members, taking factors such as flexibility and broader income needs in retirement into account.
4. Determine which type of CDC arrangement is most appropriate.
5. Implementation a new future proofed pensions and decumulation strategy.

Steven Taylor, Partner at LCP, commented: “What stands out from the polls is that sponsors and trustees are laser focused on outcomes. The greatest interest in CDC comes from its potential to improve both incomes and member experience through retirement without requiring higher contributions.”

Sam Cobley, Partner at LCP, added: “The strong interest in offering Retirement CDC solutions was an input into the decision for Guided Retirement regulations to be delayed. The delay allows time for providers to robustly design decumulation CDC solutions in response to a growing awareness it would be valuable in providing some member cohorts with a stable, inflation linked income solution”