Pensions minister Steve Webb admits he may be frustrated in his attempts to introduce legislation that will enable collective defined contribution schemes to be set up during this Parliament.
Last month, reports suggested measures to support CDC schemes – whereby members’ contributions are pooled and the pension is paid from the collective fund – would form the “centrepiece” of a Pensions Bill before the May 2015 general election.
Speaking to Money Marketing, Webb says: “If providers want to set these schemes up and employers want them for their employees that should be an option.
“That seems to be a pretty low bar – unless you think CDC is somehow evil and can demonstrate real harm then it should be part of the mix.
“We are chewing over what people have said and I would like to legislate sooner rather than later. But every Government department has its legislative priorities and the Coalition will have to thrash that out.
“I cannot guarantee legislation in the final session of this Parliament but I would certainly like to see that.”
Webb also hinted CDC schemes could be excluded from the Government’s ‘pot follows member’ reforms.
He says: “We had envisaged pot follows member initially to be for vanilla DC pots. How that would interact with CDC is something we would have to think about.
“You can argue it both ways because as long as you had an accurate assessment of net inflows and outflows you could invest for the long-term.
“It is not wholly incompatible but in terms of getting pot follows member off the ground you might think about a narrower scope in the first instance.”
Hargreaves Lansdown head of corporate research Laith Khalaf says: “There is no employer demand for CDC. Even if the Government got this through at a legislative level before May 2015, if you haven’t got a market then it is dead in the water.”
You can read the full transcript of the Webb interview at Money Marketing Uncovered.