A new wave of interest in “Dutch-style” pension schemes is sweeping through UK employers, with more than 200 companies expressing a desire to join a pioneering multi-employer collective defined contribution (CDC) scheme that could significantly boost workers’ retirement incomes.
The pensions administrator TPT announced on May 8 that it is pressing ahead with launching the UK’s first multi-employer CDC scheme, aiming to gain regulatory approval by 2026 and begin collecting contributions by the first half of 2027.
CDC schemes, widely used in the Netherlands, are pitched as a middle ground between generous but costly defined benefit (DB) schemes and more common defined contribution (DC) pensions. TPT claims that CDCs could generate pensions that are 20 to 50 per cent larger than standard DC schemes — all for the same contribution levels and risk profile.
Andy O’Regan, chief client strategy officer at TPT, said the organisation had spoken with over 200 employers who are “interested in pursuing this”, representing a potential membership base far exceeding the 3,000–6,000 individuals required to make the scheme viable.
“We’re confident we can hit the critical mass needed,” said O’Regan, adding that TPT is also exploring the development of single-employer CDC schemes for large corporates.
The growing enthusiasm follows the example set by Royal Mail, which became the first UK employer to roll out a single-employer CDC scheme in 2023. The move played a key role in settling a long-running industrial dispute, and the model has since been hailed by many in the pensions industry as a breakthrough.
While proponents, including actuarial giant Aon, have described CDCs as “one of the greatest innovations in UK pensions in generations”, critics such as independent consultant John Ralfe warn of flaws in the underlying business model, particularly around the lack of individual guarantees.
Unlike conventional DC schemes, where individual pots are de-risked in the lead-up to retirement, CDC schemes pool assets and share risk across generations. This allows them to remain invested in growth-oriented assets such as equities for longer, theoretically delivering stronger long-term returns. However, CDC members receive “target pensions” rather than guaranteed incomes.
The Department for Work and Pensions is due to lay down formal regulations for CDCs this September. Torsten Bell, the pensions minister, welcomed TPT’s initiative, calling the schemes “an important, innovative addition to the UK pensions landscape”.
TPT, based in Leeds, administers £11.6 billion in assets across multi-employer schemes and is effectively owned by its 110,000 DB members. Its clients include around 2,000 employers and 470,000 members in sectors ranging from housing associations to independent schools and charities.
The Church of England is also reportedly exploring the possibility of launching its own multi-employer CDC scheme to serve its diverse network of organisations.
As the conversation around pension adequacy intensifies in the UK, CDC schemes may offer a compelling new route for employers looking to improve retirement outcomes without bearing the full financial burden of DB-style guarantees.
