The Arboreum Pensions team includes (top row, left to right) managing director Adrian Boulding, chief operating officer Matt Ashton-Smith; (bottom row, left to right) chief financial officer Fabian Uhlig; and project manager Nikolai Gerasimov.
Arboreum Pensions has launched a multi-employer whole-of-life collective defined contribution (CDC) scheme.
The scheme – created with support from the Vestey and Timpson family businesses – is aiming to be authorised by The Pensions Regulator (TPR) and become operational next year.
Arboreum managing director Adrian Boulding said the proposition is targeting a membership of 500,000 by the end of 2032 – with Vestey and Timpson expected to be among the initial employers taking part in the new scheme.
The launch comes as regulations enabling the launch of unconnected multi-employer CDC schemes came into force on 31 July – expanding the UK's CDC framework beyond single or connected employers.
Arboreum said the scheme would offer a new approach between traditional defined contribution (DC) schemes, where individuals carry most risks, and defined benefit (DB) schemes, where employers promise a guaranteed level of pension.
Boulding said Arboreum was particularly targeting firms that had closed DB schemes, moved to a DC alternative and possibly now regretted no longer offering their employees an income for life.
He explained: "For too long, employees have faced a choice between DC schemes that place most of the risk on individuals and DB pensions that are increasingly unavailable in the private sector. We've created a different way forward bringing people together in a collective, CDC, arrangement. With this new scheme, we aim to provide a target-based income for life and help more workers achieve better retirement outcomes.
"Many businesses are looking for a pension arrangement that reflects their long-term commitment to their people. Our CDC scheme has been designed to meet that need, combining professional investment management, collective risk sharing and strong governance within a sustainable multi-employer structure. Its long-term framework is focused on fair and sustainable outcomes for current and future members and gives UK employers a new way to offer a high-quality workplace pension without taking on a DB promise."
Hymans Robertson has supported Arboreum with actuarial advice on scheme design and the benefit specification, with senior partner Jon Hatchett acting as scheme actuary. CMS has supported on legal matters.
Commenting on the launch, Hymans Robertson partner Paul Waters said: "The launch of Arboreum is an important milestone for the development of CDC pensions in the UK. For many employers, there's been a gap between what is offered by DB schemes with a certainty of benefits yet uncertain employer cost of DB pensions and the individual responsibility placed on members in DC schemes.
"CDC offers a different approach. It enables members to share risks collectively and benefit from a long-term investment strategy focused on delivering sustainable retirement incomes. This model has the potential to improve member outcomes as well as broaden access to high-quality workplace pension provision."
Waters added: "It has been a privilege for our team at Hymans Robertson to support Arboreum in developing this proposition. Its focus on strong governance, good member outcomes and bringing CDC to a wider employer market makes it a significant step forward for pension innovation in the UK."
Other appointments
Boulding said Arboreum was currently in the process of appointing trustees to the scheme – noting it was looking to have a balance of people with an understanding of family businesses along with those experienced in the professional trustee marketplace. It said it hoped to announce the board over the coming weeks.
The firm said it was also currently finalising the process of appointing an administrator and investment providers.
Boulding said the scheme wanted a mix of what he called "conventional assets", such as quoted equities, alongside a smaller allocation to UK productive assets – noting such investment in the UK would support "the next generation of UK workers, as they are going to be the ones providing the goods and services for our UK-based retirees".
An expanding market
Arboreum Pensions is one of four providers currently developing a multi-employer CDC proposition after the government gave the go-ahead for CDC scheme expansion last year.
TPT Retirement Solutions announced its intention to enter the multi-employer CDC market, targeting authorisation by the end of 2026 and launch in 2027. Aon announced plans last month to introduce a multi-employer CDC section within its master trust. Pensions Mutual will be seeking authorisation for its multi-employer CDC offering shortly.
