I make no defence for being in Edinburgh to right an unintentional bias in the conference agenda that neglects the arrival of CDC as a new force in Pensions UK.
We have £1.2tr in funded DB pensions and future liabilities of rather more than that. My friends tell me there needs to be growth in our legacy pension assets to pay the bills but that is being taken of, 75% of our 4,500 DB funds are in surplus and the PPF is in surplus to around £16bn. I am all for an improvement in education of DB trustees who need to move from “endgame” thinking, to run on thinking (where appropriate).
But I do not think that pensions ends with the closure of DB to future accrual. It has not found a replacement for DC in the past 20 years, not until now. But since October 22nd 2025 there is a generally available way for companies large and small to work together to deliver pensions to staff through CDC.
This heroic advance is being ignored by Pensions UK and it was ignored again yesterday. I had to raise the question of the availability of CDC to those in the room and the million + employers not in the room with staff who would benefit from a pension not a pot.
My questions to Torsten Bell during his talk were whether he was promoting UMES to employers for use from 2027 and whether in following years, Retirement CDC would follow. The answers were positive on both accounts and while Retirement CDC is principally of interest to master trusts to promote, I have no hesitation when asked in saying Pensions Mutual has been set up with the FCA to offer employers control of their CDC scheme within collectively.
As I left the room following Torsten Bell’s speech, a message appeared on my phone asking me if I could explain CDC to a group of union pension officers. A meeting room was found and so was the only union officer in the building (Glyn Jenkins) , Terry Pullinger came to his computer and we had an hour discussing what CDC could mean. The message to unions is very simple – better pensions for their members at no extra cost to them or their employers. A Mutual to run the CDC and trustees reflecting the views of members, their representatives and their employers.
I do not suppose that the opportunity was quite so well planned by Torsten Bell as I am making it sound, but his enthusiasm to get CDC done is what has given us the courage to promote CDC for progressive employers who see truth in the statement that CDC offers up to 60% more in pension than DC.
I know that such progressive employers do exist and there are several at this conference who are determined to get CDC in and not wait for the partial solution that is Retirement CDC, a solution when you get to retirement and not available for a few years.
Willis Towers Watson gave an effective and sensible explanation of how Retirement CDC will work as an extension of their DC workplace – LifeSight – is big enough to offer CDC without having to recruit new employers. I see it as a defensive mood to ensure they keep members within the fold while Pensions Mutual aggressively sets after those in DC who are set to get no pension (only a pot and retirement guidance).
I don’t think that UMES whole of life CDC needs compete with Retirement CDC when operated by WTW but there are not many Master Trusts who have the capacity to deliver as explained. It is an elite product for the elite employers able to access LifeSight.
For the Union pension officers, what is needed is something that they can take to employers as a non controversial improvement in their members later life pay. CDC on its own will not solve the problem of pension adequacy but it will be a start and if followed by increases in contributions and ambition by employers, there will be hope for the future.
I last saw that hope in the early years of this century when DB accrual was at its height and people still looked forward to retirement as a time when they could relax in financial comfort. Those millions were those in DB plans (public and private) and today the numbers coming through with that same comfort is massively reduced.
Yesterday I wanted to bring the ambition that we once had back into the Conference and I hope I did. I hope this blog nudges us a little further towards that comfort. I hope that in conjunction with the DWP and TPR, we will see UMES CDC delivered this year and Retirement CDC two years later.
Pensions UK has underestimated the importance of CDC to unions, employers and savers It should recognise that pensions did not stop when private DB stopped , it is returning with CDC to offer people better pensions.