Source · Select Committees · Work and Pensions Committee
Recommendation 5
5
Paragraph: 32
We were told that most savers want a reliable income in retirement.
Conclusion
We were told that most savers want a reliable income in retirement. Annuities provide this for savers with defined contribution pensions, but have dramatically fallen in use since the introduction of pension freedoms. The transition from defined benefit schemes to defined contribution schemes means that fewer people will have occupational pensions which provide a guaranteed income in future and therefore we expect there to continue to be a demand for annuities or annuity-like products.
Paragraph Reference:
32
Government Response
Acknowledged
HM Government
Acknowledged
TPR has recently published the code of practice for CDC pension schemes for consultation. They will also look to publish guidance as appropriate to support trustees. Whilst the code of practice is primarily for trustees, they think that the code and any further guidance could also be used by employers and their advisers in understanding the requirements of setting up a CDC scheme. They do not consider that a toolkit would be able to go further than the code in setting out the requirements to establish a CDC scheme. While initially CDC schemes will be limited to those set up by single employers, or two or more connected employers, the Pension Schemes Act 2021 contains powers to enable further developments of the CDC market, such as multi-employer schemes. DWP looks forward to working with the TPR and industry on any development and expansion of CDC schemes.