Lobby group to oppose retrospective DWP legislation



CDC Forum will Oppose Retrospective DWP Legislation

CDC Forum will Oppose Retrospective DWP Legislation

Lobby group Collective Defined Contribution Forum (CDCF) warned that retrospective legislation stemming from the Imperial Home Décor judgment could ruin the future development of collective defined contribution.

The members of CDCF will organize an “emergency meeting” next week to decide its strategy following its meeting with the Department for Work and Pensions (DWP).

The Supreme Court had ruled in July that DC schemes with defined benefit elements, such as internal annuitisation or an investment underpin, will be regulated by money purchase rules, making establishment of CDC scheme easier.

However, to counter the ruling, DWP promptly announced it would introduce retrospective legislation.

The key members of CDCF are HarmishWilson partner Harmish Wilson, The Pensions Trust, Pinsent Masons partner Robin Ellison and Danish provider ATP.

“The DWP has clearly got a worthwhile aim – to clarify the confusion between DB and DC. But rather than jump in they should take a step back and think about what would be a good structure for the future. They should not impose legislation now that could completely stifle future initiatives,” said Sarah Smart, chairman of trustees at The Pension Trust.

“They need to get real about the fact that DC, in its current guise, is a lousy solution. We need to work together to do something better for members. But if they continue doing things like imposing retrospective legislation then we are doomed,” she added.

She rejected the government’s claim that there was no demand for CDC.

 

Barry Parr, another member of the CDC Forum and Orange Pension Scheme trustee and co-chairman of Association of Member-Nominated Trustees backed Smart’s claim. He said the company Everything Everywhere, formed by merging T-mobile UK and Orange UK, had seriously considered CDC but abandoned the plan since ‘legal unknowns’ were too many. The company will consider it once legislative position becomes clear, he said.

 

“The big driver we were looking for was the potential that members can finish up with better benefits than traditional DC. That is still an attraction,” he added.

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