The U.K. government is seeking views on a proposed regulation that will permit multiemployer plans, known as master trusts, to utilize collective defined contribution model in their plan design, it said in a consultation Monday .
The U.K. law currently allows only single-employer plans to adopt a CDC plan design.
In a CDC plan, retirement income is secured by pooling plan participants' assets and investments.
The government said interest from master trusts prompted a proposal to extend the CDC regulation to multiemployer plans, which would provide both accumulation and decumulation on a collective basis.
U.K. lawmakers are also exploring the potential for utilizing a CDC model in decumulation only.
The consultation is aimed at establishing whether there is an appetite to establish decumulation-only CDC plans by multiemployer plans, the government said. The consultation will run until March 27.
Shriti Jadav, senior consulting actuary at Willis Towers Watson, said in an emailed comment Monday: "We see this as a significant step towards meeting the government's ambition of making CDC more widely available through facilitating multiemployer schemes, master trusts and decumulation-only CDC."
"While current legislation allows single employers to launch CDC schemes, it restricts this design to workplaces where the employer is big enough and enthusiastic enough to set up its own scheme," Ms. Jadav added. "Permitting multiemployer schemes and master trusts to provide CDC pensions to unconnected employers will go a long way to removing this scale hurdle."
Chintan Gandhi, partner and head of collective defined contribution at Aon, added in a separate comment: "This is the next step in the evolution of UK CDC schemes, with the DWP (Department for Work and Pensions) on the path to legislating for multi-employer CDC schemes, and testing the water on decumulation-only CDC. We urge the government to commit to ensuring the regulations are in place for both of these forms of CDC schemes to exist by the end of 2024."
