News in brief... pooling your pension

⬤ Ministers have confirmed changes to the law that will enable the launch of collective defined contribution (CDC) plans from August onwards. The government hopes the schemes, which are widely used in countries such as Canada and the Netherlands, will be popular with employers who no longer want to take the risk of funding guaranteed final salary pensions. CDCs work more like money purchase (ie, defined contribution) schemes, where your benefits in retirement depend solely on the returns generated by your savings. Crucially, however, your money (and risk) is pooled with that of other savers, which enables the scheme provider to target a set level of pension more readily.

⬤ No-fault divorces could mean even fewer couples consider pension rights when splitting up. Reforms to divorce laws that came into effect last week make it easier for couples to divorce quickly and amicably if both parties agree. But some lawyers worry that this will mean pensions are overlooked, despite these assets often representing a couple’s most valuable stores of wealth. Just 13% of divorce settlements currently include some form of pension arrangement.

⬤ Pension savers should soon be able to see all their pension arrangements on a single online dashboard, with an industry-wide initiative that has been promised for years now due to take place in the next few months. Draft regulation published by the Department for Work and Pensions and the regulator, the Financial Conduct Authority, paves the way for all pension schemes to join the project by April 2023. Once savers can see all their pensions in one place, they should find it easier to manage their retirement planning.