Management Consulting

In November 2021, Aon plc identified a significant interest in Collective Defined Contribution (CDC) schemes among UK employers and pension scheme trustees through their online quiz, "Is CDC right for my scheme?" Over 400 participants responded, revealing that more than 50 percent were in favor of advancing legislation to broaden the application of CDC beyond single-employer structures. This interest highlights a growing recognition of CDC's potential to provide a sustainable income for retirees on a fixed cost basis, alleviating the complexities associated with individual financial and investment decisions. Chintan Gandhi, Aon's partner and head of CDC, noted that the responses indicated a strong desire for tailored CDC solutions. Specifically, 36 percent of respondents expressed interest in establishing single-employer CDC schemes to better support their workforce, while 26 percent favored multi-employer arrangements, such as industry-wide CDC schemes or those facilitated by commercial master trusts. Additionally, 25 percent of participants saw value in CDC during the pension decumulation phase, particularly in offering employees the option to purchase a CDC pension at retirement. This data underscores the pensions industry's efforts to innovate and adapt to the needs of employers and employees alike, positioning Aon at the forefront of this transformative movement in UK pensions. The quiz results not only reflect a robust demand for CDC but also suggest a momentum that could significantly impact millions of pension savers in the UK, paving the way for more informed and beneficial retirement planning.