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Work and Pensions committee extends inquiry deadline

05 Jan 2018, 15:26 ... -deadline/

The Work and Pensions select committee has extended the deadline of its inquiry into collective defined contribution (CDC) schemes until 31 of January.

The committee announced at the end of November that it would be looking into this type of retirement savings plan, which has the “potential to address some of the concerns that policymakers and the public have about the current pension offer”.

The deadline for written submissions was 8 January, next Monday, and has now been extended until the end of the month.

CDC schemes are also known as a form of "defined ambition" scheme and differ from defined benefit (DB) schemes, since they do not guarantee certain incomes in retirement.

Instead, CDC have a target or "ambition" amount they will pay out, based on a long term, mixed risk investment plan.

These schemes also differ from the traditional defined contribution (DC) plans, since they do not produce individual pension pots. They invest savings in larger collective pots instead, which then provide an income to individuals during their retirement.

The Pension Schemes Act 2015 created by the 2010 to 2015 coalition government defined "shared risk/defined ambition" or CDC as a distinct pension category.

However, regulations under the act to bring them into effect have not yet been introduced.

In October 2015, the government announced the plans would be shelved indefinitely so as not to distract from other major reforms such as auto-enrolment and pension freedoms.

Frank Field, chairman of the Work and Pensions select committee, said: “What the select committee is aiming for is to retain some of the best features of company schemes in a different age when employers are no longer willing or able to sustain the burden of final salary promises to employees, who could club together and pool the risk themselves".

In the meantime, Royal Mail and the Communication Workers Union (CWU) are discussing the creation of a CDC scheme to solve the current pensions dispute.

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