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Some pension savers may see their retirement fund increase as part of Government The reforms enable more people to save in larger, collective pots.
Rules are set to be framed for Collective Defined Contribution (CDC) schemes, to allow their expansion to more employers.
The initiative enables employers to combine multiple pension schemes into a collective fund, providing workers with regular pension payments throughout their lives.
The government said the funds could potentially provide greater security and a higher average income during retirement than people saving in a personal pension pot.
It says group defined contribution plans can potentially boost retirement income by as much as 60%.
The government said pooling funds would enable schemes to make larger investments in assets such as UK businesses and infrastructure projects, helping to drive economic growth.
It is also launching a consultation on “Retirement CDC”, which it says will allow those looking to move their pension pot to a defined contribution (DC) scheme. CDC Planning on retirement.
It says the aim is to see more people receive a regular income throughout their lives, without having to worry about managing their retirement money or wondering how long their savings should last.
Pensions Minister Torsten Bell said: “People approaching retirement often face complex choices and risks that they should not face alone.
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“Group pensions offer a better deal, where risks are shared, returns are smooth, and retirement income is strong and paid throughout life.
“By expanding CDC to more employers and providing advice on superannuation CDC, we are helping to create a fair pension system that gives people confidence that their hard-earned savings will last and they can enjoy their retirement.”
The government said the move builds on progress made by the Royal Mail Collective Pension Plan, which has more than 100,000 members.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “Multi-employer CDC schemes have the potential to boost retirement saving by sharing risk between savers.
“Success depends on striking the right balance between strong protections for members, simplicity and fairness of plan design.
“We agree with the Government that innovation in CDCs holds great promise for savers and we are pleased that this Government is supporting the development of both multi-employer and superannuation CDCs.”
Nausicaa Delphas, Chief Executive pension regulatorSaid: “We are all working towards transforming a savings system into a pension system that provides a sustainable income in later life.
“Only innovative solutions such as superannuation CDC schemes can play a role in this, and I would encourage people to get involved in the upcoming consultation to ensure their views are heard.”