This morning I set out what I see (from the private side) what the DWP see happening (from the public side). This blog looks at the Roadmap for Retirement CDC ( transfers that result in immediate pensions being paid – pensions and nothing else but pensions).
This diagram appears at the back of the consultation document and expresses a problem that the DWP has and that will face those running pensions and employers choosing what their staff by way of pensions. It is not an irretrievable problem and it’s not one that the DWP are ducking.
The fact is that this road map doesn’t quite align with the Pension Schemes Road Map set out by the Pensions Minister in the Pension Schemes Bill published this summer.
A misalignment of road maps.
The problems are around the availability of Retirement CDC to meet Guided Retirement requirements, where master trusts are looking to operate CDC for Retirement only or partnering with a Retirement CDC Scheme either as a standalone scheme or a whole of life scheme taking transfers to pay pension only.
The Roadmap shows that while the legislation will be in present at the back of 2027, it won’t be till 2028 that TPR will receive applications and not till late in 2028 or perhaps later that single Guided Retirement will be able to include CDC pensions.
I know that’s technical and a little dull but it came up in this week’s Pension PlayPen coffee morning and wasn’t ducked by DWP CDC head, Julian Barker. It’s on the Pension Minister’s agenda of things to get sorted. Right now we have this statement in the Retirement CDC consultation
Interaction with Guided Retirement policy
6. Potential providers have expressed interest in offering Retirement CDC, particularly in the context of the forthcoming duties on trustees or managers to provide default pension benefit solutions under the Guided Retirement provisions in the Pension Schemes Bill 2025, which is currently being debated in Parliament. Under these measures, trustees or managers of DC occupational pension schemes will be responsible for designing a pension benefits strategy and selecting default pension benefit solutions for their members. Retirement CDC might be offered as a default pension benefit solution under the member’s own scheme; or members may be transferred into an external scheme to access the Retirement CDC scheme (in this case, Retirement CDC would be a qualifying pension benefit solution).
7. Under clause 50 of this Bill (transferrable members), there are two conditions, one of which must be met, for an occupational pension scheme to transfer members (including to a Retirement CDC) to access a qualifying pension benefit solution. The first condition is that it is not reasonably practicable for the trustees or managers of the scheme to design and make available default pension benefit solutions for the members concerned. The second condition is that the trustees or managers have determined that a qualifying pension benefit solution of a qualifying scheme will provide a better outcome for the members concerned, than a solution that the trustees or managers could themselves design and make available.
8. Clause 57 of the Bill requires the Financial Conduct Authority (FCA) to make corresponding provision in relation to FCA regulated schemes. A discussion of Retirement CDC as a potential option for members of contract-based, FCA-regulated schemes can be found in Chapter 4.
9. It is intended there will be ongoing stakeholder engagement on the detail of the Guided Retirement measures in the coming months. The inclusion of Retirement CDC as a default solution will feature in these discussions.
The Roadmaps for Guided Retirement pension defaults shows that these need to be in place in 2027 and the Roadmap for Retirement CDC says it won’t be ready till 2028. I hope we will move at the faster pace and have CDC as a retirement option sooner rather than later.
