Aon is the latest company to confirm its plans to launch a collective defined contribution (CDC) pension scheme, after the Pensions Regulator opened its application process at the end of July.
The consultancy giant has long been a proponent of CDC and plans to launch a whole-of-life multi-employer arrangement as a section of its traditional defined contribution master trust.
Subject to approval from the regulator, the CDC section of the Aon Master Trust is expected to open for business in 2028. Employers will have the option of either regular DC accrual, CDC, or a combination of both.
Chintan Gandhi, partner and head of CDC at Aon, said: “Whole-life CDC pensions provide a powerful tool to attract, reward, retain and retire employees on time, and which strengthens the employee value proposition in competitive labour markets. We believe that CDC could revolutionise pensions in the UK, creating value for both employees and employers.
“We are now looking to continue our engagement with a wide range of employers, sectors and unions in the UK, including seeking feedback to help shape our plans for CDC.”
Michael Clare, head of EMEA wealth solutions at Aon, added that the company was also exploring a retirement-only CDC offering. The rules for this type of decumulation arrangement are expected to be consulted on later this year.
“CDC schemes can therefore invest more productively and support responsible, sustainable outcomes – helping to deliver the kind of world current and future generations want to retire into.”
Jo Sharples, Aon
TPT Retirement Solutions has expressed its intention to launch a CDC scheme, and named three professional trustees to its board last year. Kim Nash of Zedra, Alison Hatcher of Vidett, and Venetia Trayhurn of Falcon Trustees are overseeing the development of the new scheme.
In addition, the Church of England Pensions Board is exploring CDC with a view to applying to the regulator later this year.
The LifeSight master trust plans to launch a retirement-only CDC arrangement when this becomes available.
Aon’s DC chief investment officer Jo Sharples highlighted the investment horizons of CDC schemes, saying: “Collective investment and long-term horizons allow CDC schemes to stay meaningfully invested in growth assets, including private markets, all the way up to and through retirement. CDC schemes can therefore invest more productively and support responsible, sustainable outcomes – helping to deliver the kind of world current and future generations want to retire into.”
