The Department for Work and Pensions launched its consultation on collective defined contribution today. Here are the key questions it is asking…
- Are there ways in which the introduction of CDC Schemes would give rise to different impacts on individuals in relation to one of the protected characteristics?
- Do you agree that CDC benefits should be classified in legislation as a type of money purchase benefit?
- Are there any areas where the current money purchase requirements do not fit, are inappropriate or could cause unintended consequences?
- Is there a minimum membership size for CDC scheme below which a scheme could not be viewed as having sufficient scale to effectively pool longevity risk to the benefit of the membership?
- Do you agree with the proposed approach to TKU for CDC schemes?
- Are there any additional TKU requirements that should be placed on the trustees in CDC schemes?
- Are there any TKU requirements that should be relaxed for the trustees of CDC schemes?
- Which of the two AE tests would be more appropriate for CDC schemes, and how might either test best be modified to better fit CDC schemes?
- What issues might arise from having no in-built capital buffers in the scheme design?
- How can schemes best communicate with members to ensure they understand the risk that their benefits could go down as well as up, even when in payment?
- What additional issues may arise from using a best estimate basis for valuation, and how should those issues be addressed?
- Should we restrict CDC scheme designs to those schemes which would be sustainable without continuing employer contributions?
- We would welcome feedback on how best to manage risk generally going forwards.
- Does the proposed CDC scheme framework, as set out in this consultation document, address concerns about risk transfer between generations? We welcome thoughts on any other measures that could also address this.
- We would welcome thoughts on appropriate wind up triggers and how best to manage associated risks.
- Are there any elements of the proposed regime that it is not appropriate to apply to CDC schemes?
- Are there any additional authorisation requirements that should be placed on CDC schemes?
- Are there any other investment requirements that should be required in addition to those proposed above?
- Are there any other disclosure of information requirements that should be required in addition to those proposed above?
- Do you agree that CDC benefits should be subject to a similar cap to the automatic enrolment charge cap?
- Do you agree with the proposal that charge cap compliance should be assessed on the value of the whole scheme's assets?
- What would be an appropriate approach to handling transfers out of or into CDC pension schemes?
- Should transfers be restricted in any way - for example, to take account of the sustainability of the fund?
