The government does not anticipate the wider rollout of collective defined contribution (CDC) schemes besides Royal Mail in the next few years, it has said.
Julian Barker, defined benefit (DB) team leader at the Department for Work and Pensions (DWP), said at a Westminster Business Forum conference today (13 September) the government was aware of a wider interest in the schemes. But he added these parties were at a "very embryonic thinking" stage.
He said: "They are more interested in seeing what we will do now and how it will all pan out.
"I honestly don't think that anyone else will really commit to this for 3, 4, 5 years. They will wait to see how all takes off or doesn't."
Mr Barker said a consultation on CDC schemes will be launched in the autumn but he could not confirm whether legislation would be put through to Parliament as early as next year.
He said: "The question of parliamentary time is one not completely in the gift of DWP, but I think we can argue a good case for parliamentary time - but as always, events can happen."
CDC pension funds differ from defined contribution pensions because they do not produce individual pension pots. Instead they invest savings in a large collective pot, which then provides an income in retirement.
They also differ from DB plans because they do not guarantee a particular income in retirement and instead have a target amount they will pay out based on a long term, mixed risk investment plan.
The Pension Schemes Act 2015 passed by the coalition government referred to CDC schemes but the secondary legislation to create them was never introduced.
Royal Mail is currently working with the DWP on the changes needed to introduce CDC schemes in the UK after reaching an agreement with the Communication Workers Union to set up a collective scheme for its employees, which was given approval by workers in April.
The agreement included the closure of its DB pension fund to future accrual on 31 March 2018.
maria.espadinha@ft.com
