Collective Defined Contribution Definition

GLOSSARY

What does Collective Defined Contribution mean?

Scheme aiming to supply sufficient funds to provide a targeted (but non-guaranteed) level of retirement income, with some inflation-proofing.

Contributions by and in respect of members are pooled, thereby enabling economies of scale, more diverse investments and the sharing of investment risks. Benefits are paid from the pool of assets.

Pensions

Scheme aiming to supply sufficient funds to provide a targeted (but non-guaranteed) level of retirement income, with some inflation-proofing.

Contributions by and in respect of members are pooled, thereby enabling economies of scale, more diverse investments and the sharing of investment risks. Benefits are paid from the pool of assets.

View the related practice notes about Collective Defined Contribution

Commutation of small lump sums—checklist

Commutation of small lump sums—checklist Trivial commutation lump sums The conditions for payment of a trivial commutation lump sum as an authorised member payment are: • the payment is made either from a defined benefit arrangement, a collective defined contribution arrangement, in respect of a money purchase pension already in payment, or a combination thereof • the member must have either reached normal minimum pension age or met the ill-health condition • the member must have some lump sum allowance available • the payment must extinguish the member's entitlement to benefits under the scheme • the value of the member's pension rights across all schemes must not exceed £30,000 on the valuation date (known as the nominated date) • the lump sum payment must be paid within a 12-month window (known as the commutation period), and • The payment is made either: ◦ at the time when no trivial commutation lump sum has previously been paid to the member, or ◦ before the end of the commutation period...

Types of pension arrangements for employees

Types of pension arrangements for employees Ways of accruing pension benefits There are a variety of possible pension arrangements for employees. The main options include: • occupational pension schemes • personal pension schemes • employer-financed retirement benefits schemes (EFRBS) • master trusts (including the National Employment Savings Trust (NEST) since October 2012) • the state pension Employees may be members of and contribute to more than one pension arrangement at the same time eg the employer's occupational pension scheme and the employee's own personal pension scheme. Occupational pension schemes From a legislative point of view, an occupational pension scheme: • is a scheme or other arrangements which provides benefits to or in respect of people: ◦ on retirement ◦ on having reached a particular age, or ◦ on termination of service in an employment • must have been established for the purpose of providing benefits to, or in respect of, people with service in employments of a particular description (and perhaps also for other people too) • must...

Discover our 33 Practice Notes on Collective Defined Contribution

Pensions weekly highlights—10 October 2024

This week's edition of Pensions weekly highlights includes a review of key news stories, as well as dates for your diary and trackers.

Government consults on CDC expansion to multi-employer schemes

Law360: The government on 8 October 2024 floated plans to create new pooled pension funds spanning multiple employers, which will have the financial firepower to invest in UK economic growth.

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GLOSSARY