After over seven years in the making, the Royal Mail collective defined contribution (CDC) scheme finally went live on 7 October, making it the first and only single employer CDC scheme in the UK.

Industry experts said the launch represents a “significant” milestone for the UK pensions industry, showing that CDC is “no longer a theory” but something that is “actually happening” in the UK. According to commentators, there are other large employers that have been waiting on Royal Mail to see if it can make it happen for them as well.

However, the next big thing for the pensions industry is the consultation on multi-employer and industry-wide schemes that will potentially enable a much larger pool of organisations to take advantage of CDC.

The consultation launched on 8 October, with the Church of England Pensions Board as the first entity to express interest in seeing how the arrangement might transform the retirement plans for those who work for the Church.

There are others too. TPT, for example, said it has been speaking to around 200 employers who have expressed interest in CDC.

British Growth Fund

The British Business Bank has been tasked by the government to establish the British Growth Partnership to crowd-in UK pension fund and other institutional investment into venture capital funds and innovative businesses, supported by a cornerstone government investment.

Investments from the fund will be made on a long-term, fully commercial basis, independent of government, leveraging the Bank’s capability and market access to a range of promising high-growth UK companies.

The British Business Bank said that over the coming months it will seek to raise hundreds of millions of pounds of investment for this model, with the aim of making investments by the second half of 2025.

The move has been branded as “critically important” for the growth of the UK economy, and ensuring that homegrown companies are able to access the investment they need to grow, scale and stay in the UK.

Budget

Despite a lot of industry speculation that workplace pensions could be targeted by Rachel Reeves in her first Budget as the chancellor, when seeking to raise tax revenues. The industry expected it could be critically important for the growth of the UK economy that homegrown companies are able to access the investment they need to grow, scale and stay in the UK.

rachel reaves

UK chancellor of the exchequer Rachel Reeves is expected to give her first Mansion House speech next week

However, the chancellor chose not to go in that direction, a decision that was met with relief from the pensions industry.

Experts say it is reassuring the chancellor seems to be using the pensions review to focus on key issues, instead of the budget, while “carefully avoiding unintended consequences that could harm savers’ trust and discourage pensions saving”.

The chancellor is due to address the industry again in her first Mansion House speech next week, where she is reportedly expected to propose an overhaul to the pension fund industry as the government continues to try to unlock billions of pounds worth of investment for the local economy. 

Items to note:

Pamela Kokoszka

UK Correspondent

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Pamela is IPE's UK correspondent. Before joining IPE in May 2023, she spent five years writing about the insurance industry. During her career so far she won awards for Most Promising Newcomer in 2020 and Best Investigative Article in 2022 from the British Insurance Brokers Association, and was also highly commended at the WTW Media Awards for Insurance Features Journalist of The Year.View full Profile

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