Institutional Asset Manager Newsletter 11.10.24

The Royal Mail debuts new pension scheme

Another week, another UK pension consultation. The latest review focuses on extending collective defined contribution (CDC) schemes, which the government believes would result in "greater retirement security for millions of savers" and – perhaps more importantly for Labour’s political agenda – "allow for larger investment in the UK – supporting the government’s growth mission to boost the economy".
It is obviously no coincidence that the CDC consultation was announced at the same time the UK’s first ever CDC scheme – The Royal Mail Collective Pension Plan – went live.
The government sees RMCPP as "a truly landmark moment for the UK pension landscape", and hopes it will encourage other employers to follow suit.
Government likes the idea of more CDC since that would help consolidate the plethora of small schemes, which typically lack the governance and financial clout to invest in the private markets that are crucial to achieving the levelling up and net zero ambitions.
But government expectations for a swathe of CDC schemes could be short lived.
The RMPCC took eight years to pass the finish line and is the result of protracted negotiations between sponsoring employers and trade unions who were looking for a defend benefit/defined contribution compromise.
According to pension commentators, there are relatively few DB schemes today that are in a similar position, while the chance of existing workplace DC schemes moving to the collective model is slim since there is little incentive to do so.
It is likely that changes to the CDC legislation will likely pass, but what is far less likely is that it will make any real difference to the pensions landscape.
In more positive news for the government’s growth ambitions, we bring you the latest findings from CIL’s Investment 360 Index.
The data show confidence among UK dealmakers is surging, with almost half (48 per cent) positive about the UK’s short-term economic outlook.
This is a notable improvement from just 19 per cent in 2024. In contrast, only 15 per cent of respondents hold a negative view this year, with 34 per cent remaining neutral.
In another boost to the incoming government, this year’s findings present a volte-face in opinions from 2023 when nearly half of respondents (48 per cent) were negative about the short-term economic outlook.
And the future looks bright, too. Fifty-nine per cent of respondents express positive sentiment in the UK’s economic climate over the next five to 10 years. Maybe CDC schemes won’t matter after all.
We are also pleased to bring you a discount for a London-based responsible investment conference. This code, ETF20, will gain you a 20 per cent discount on tickets to attend RAO Global’s symposium on 21st November in London. The event details are here.
Finally, your weekly reminder to nominate your service provider stands for the Institutional Asset Manager Service Provider Awards 2024.
You can register your vote here.

Gill Wadsworth, Editor, Institutional Asset Manager
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