Actuarial Notes

The Case for Collective DC: A new opportunity for UK pensions

By Aon Solutions UK Limited · 2020 · RET101-116-25

Study guide: Exam RET-101

An Aon paper, first published in November 2013 and updated in June 2020, that sets out the case for introducing Collective Defined Contribution (CDC) plans in the UK: risk-sharing plans widely used in several other countries but not then permitted in the UK. It reports the authors' research into the design of CDC plans and their advantages and disadvantages compared with current pension arrangements, together with modelling of their historic and prospective performance.

On the syllabus

  • Exam RET-101 — RET101-116-25; outcome 2d; sections 1-7 only.

Introduction

1 The context — why do we need Collective DC?

2 Plan design and basic principles

3 CDC – the attractions

4 CDC – the concerns

5 Governance of CDC plans

6 CDC – Doomed to failure (again?)

7 CDC around the world

8 Modelling CDC outcomes

9 Conclusions

References

Appendix A Illustrative DC scheme design

Appendix B Illustrative CDC plan design

Appendix C Draft Regulatory Framework

Appendix D Modelling CDC design sensitivities

Appendix E Methodology and assumptions

Sources