Paul Brice: Effective CDC trusteeship will require trustees who have deep familiarity with a range of relatively new – but critical – areas
BESTrustees has published a paper exploring the characteristics of effective trusteeship of collective defined contribution (CDC) schemes.
The paper – Getting CDC right: The role of effective trusteeship – acknowledges both the commonalities and differences CDC has to other scheme types and highlights a number of CDC-specific decisions trustees will need to make, as well as skills and experience they will require in undertaking their role.
The analysis follows the launch of the Royal Mail Collective Pension Plan in October 2024 and the government's introduction of regulations to allow unconnected multiple employer CDC schemes last October, rules which are scheduled to take effect from 31 July this year.
BESTrustees said CDC schemes are an innovative and developing area of the pensions landscape that many commentators believe may fill a gap between the decline of open defined benefit schemes and prospective pensions inadequacy issues with individual DC or personal pension arrangements.
BESTrustees professional trustee Paul Brice authored the paper. He said: "Clearly, it remains to be seen how the market for CDC will evolve; and regulations for retirement CDC are yet to be published.
"However, for trustees of emerging schemes, there are broad-ranging – but demanding – opportunities to exercise their skills in giving members great retirement outcomes."
Brice added: "This paper has illustrated that effective trusteeship will require trustees who have deep familiarity with a range of relatively new – but critical – areas spanning the authorisation process through to the funding arrangements, the periodic determination of pension amounts and member communication requirements.
"As CDC schemes grow in number, more trustees will become familiar with these arrangements. For the early adopters, it should be a fascinating – but rewarding – journey."
