A new kind of pension for your employees.
We are building a collective defined contribution (CDC) scheme. Savings of all members are pooled together rather than held in individual pots, so contributions are invested in one shared fund that pays a retirement income for life. We are targeting to launch and open the scheme to members in 2027.
This website is for employers considering the scheme for their workforce. Individuals considering joining a CDC scheme should refer to the scheme’s member-facing literature.
Planning for the future, together.
Many employers have told us they are considering switching their workplace pension from defined contribution (DC) to collective defined contribution (CDC). In a DC pension, each member builds an individual pot and carries the investment and longevity risk alone. CDC takes the same fixed contributions but invests them in one shared fund, which pays each member an income in retirement. Our scheme opens that fund to multiple employers, unconnected except in one aim: to give their staff an income for life expected to keep pace with the cost of living. Incomes are targets, not guarantees, and can go up or down.
Risk, shared
Investment and longevity risk are designed to be pooled across the whole membership and across generations, smoothing out the bad years no individual can plan for. Member outcomes will also be more alike than in individual DC, where some savers could do very well and others fare rather badly.
Managed collectively
All investment decisions are made by a team of professionals on members’ behalf, investing the shared fund for the long term. Any increase or decrease to pensions is applied equally to all members.
An income for life
Members receive a monthly income from the scheme from their retirement date and for as long as they live. The amount can rise or fall with the fund, but the income itself never runs out: no drawdown decisions, no annuity shopping, no pot to outlive.
What CDC offers your business and your people
Will it cost more? No. Contributions are paid at a fixed rate, as in any DC scheme. There is no funding obligation on the employer’s balance sheet, and no call for more money when markets fall: the annual review adjusts benefits, not employer contributions. The annual review is designed to absorb market movements in both directions gradually, smoothing their effect over a long horizon.
How are employees affected? Each year they are told what annual retirement income their savings are currently projected to provide, so if they wish they can adjust how much they save against a figure that means something. The scheme targets annual increases that at least keep pace with inflation over the long term, so members can assess the adequacy of their pension against today’s prices. Employees who leave service can no longer contribute to the scheme and can decide whether to retain their membership for the pension already built up or to transfer to another pension arrangement of their choice.
Who is it built for? Employers who think in generations rather than quarters. Arboreum is designed for organisations that see stewardship and the long-term welfare of their people as part of what they are building: doing right by those who have given years of service, and leaving behind something that outlasts any one generation of leadership.
It's investing in tomorrow, together.
How does CDC work?
Four steps, repeated every year for as long as a member is in the scheme.
Contributions go in
Employer and member contributions are paid at a fixed rate, as in any DC scheme, into one shared fund rather than into individual pots.
A pension is calculated
The scheme actuary works out how much more annual pension each year’s contributions are projected to buy and adds that to the pension already built up for each member.
The funds are invested
The scheme’s assets are invested for the long term. The trustees’ investment principles are to choose long term investments that will grow as the economy grows and which should enable the scheme to provide an income that keeps pace with the cost of living over time.
Reviewed each year
Every year the actuary compares the fund’s assets with the pensions it expects to pay. Benefits are adjusted to keep the two in balance. Our scheme will start with an expected increase rate of 3% p.a.
What the annual review means in practice
In most years the scheme will declare an increase to pensions quite similar to the previous year's increase. In exceptionally good years there may be a one-off increase. In exceptionally bad times pensions may be reduced to bring the scheme's assets and liabilities back into balance. Our scheme will start with an expected increase rate of 3% p.a., which is higher than our long-term inflation expectation. This starting rate is a target, not a guarantee.
At retirement
Members can take a tax-free lump sum, exchanging up to a quarter of their pension for immediate cash. The rest is paid as a monthly income for life, which continues to target increases each year once it is in payment, intended to at least keep pace with the cost of living over time.
There is no annuity to buy and no drawdown to manage. If a member dies, a pension continues for an eligible dependant.
What to weigh up
CDC shares risk across the membership; it does not remove it. Before considering the scheme for your workforce, you and your employees should understand the following.
Incomes can fall
Pension income can go down as well as up, and no particular level of benefit is guaranteed. Downward adjustments may occur following adverse investment or longevity experience. Smoothing reduces the bumps, it does not remove the risk.
Less individual control
Members have limited individual control compared with a DC pension. There is no individual pot, and investment decisions are made collectively on members’ behalf by professional investment managers.
Moving money out
Before retirement, members can transfer the full value of their pension to another scheme. The transfer value reflects a share of the collective fund, so it varies with markets and could be less than contributions paid in. Once pension payments start, transfers out are no longer available.
If things go wrong
The scheme is developing a continuity strategy setting out how it would respond if a serious issue affected its ability to continue. Depending on the circumstances, the trustees could seek to resolve the issue or wind the scheme up in an orderly way, with members’ benefits transferred to another pension scheme or provider. The new scheme might only offer a lower pension to those transferring. Arboreum Pensions will hold financial reserves to meet the costs of that period so extra administrative costs relating to a wind up would not fall on members. If the scheme could no longer accept contributions, participating employers would need to make alternative pension arrangements.
Separately from any of the above, members who have a complaint that Arboreum Pensions is unable to resolve will be able to take the matter to the Pensions Ombudsman, who can instruct Arboreum to pay compensation.
To do our best for the employees who've done their best for the business
We think in generations
People save for their pensions over a whole lifetime. We believe a pension scheme should be built by people who plan in generations, rather than quarters and years. Our design is guided by resilience and a commitment to rewarding long-standing savers with a comfortable retirement. Our ownership structure gives us the opportunity to build our scheme design patiently and scale sustainably.
We know how pensions work
Arboreum brings together some of the leading minds in UK pensions, including Adrian Boulding, Jon Hatchett and Paul Waters, who have deep structural knowledge of how schemes are designed and run. They are supported by our legal and governance advisers and, in time, an independent trustee board.
We believe in saving together
Combining savings allows people to invest in ways that wouldn't be available to a single saver on their own; scale gives access that a small, individual pot may not be able to reach. We believe that when members save collectively, the highs and lows of investing are shared and smoothed out across everyone.
Our owners
Arboreum is wholly owned by Collective Pensions, which is itself majority owned by Vestey Holdings and Timpson, two of the UK's most respected family businesses. Each has taken a stake because they believe a CDC pension scheme could offer a better way to save for retirement, and they want to help build one.
Our advisers
Hymans Robertson advises on the actuarial design of the scheme. They are one of the UK's leading independent actuarial firms and among the country's foremost experts in CDC.
CMS acts as legal counsel to our scheme, guiding policy design, scheme documentation, authorisation and ongoing regulatory compliance.
Lauren Ireland of Ideal Governance advises on scheme governance and trustee board arrangements.
We are always open to working with service providers who can add genuine value to the scheme and its members. If you think that includes you, please reach out.