Jurisdiction(s):
United Kingdom

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Key definition

Collective Defined Contribution definition

What does Collective Defined Contribution mean? A collective defined contribution (CDC) scheme is a workplace pension design where contributions are fixed, but the retirement income is a targeted (not guaranteed) amount, with increases aimed to keep pace with inflation but capable of being reduced or increased to reflect funding. Investment and longevity risks are pooled across members, and employer liability is limited to agreed contributions (unlike defined benefit schemes). In Great Britain (England & Wales and Scotland), CDC is a statutory scheme type known in legislation as a “collective money purchase” scheme under the Pension Schemes Act 2021 and related regulations. Such schemes require authorisation...

CDC pensions under the Pension Schemes Act 2015: workings, advantages, disadvantages and the repealed UK statutory framework (archived)

Published by a LexisNexis Pensions expert

Practice notes

ARCHIVED

This archived Practice Note sets out the earlier legal framework that had been established for collective defined contribution (CDC) arrangements under the Pension Schemes Act 2015. It is not maintained and is supplied solely for general background reference. For up‑to‑date information on the current legal framework for CDC, see Practice Note: Collective defined contribution (CDC) schemes—an introduction and Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021, which provide the relevant, current guidance.

What are collective defined contribution schemes?

CDC schemes are a form of defined contribution arrangement in which assets are pooled on behalf of members, and no individual member has an interest in particular assets. The government is championing these schemes as part of its reform agenda to reshape workplace pensions. This Note offers a short explanation of how they operate, comments on the advantages and disadvantages linked to them, and summarises the government’s proposed legislative changes intended to facilitate CDC schemes in the UK.

How do CDC schemes work?

A central purpose of a CDC scheme is to accumulate resources aimed at delivering a target level of income, with at least some protection against inflation. An employer pays fixed contributions into the scheme but...

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Web page updated on 21/05/2026

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