First in the queue to sign up are over 100,000 posties who work for Royal Mail. The scheme is strongly backed by the posties union the Communication Workers Union (CWU).
The new, Collective Defined Contribution (CDC) schemes, will offer savers an income in retirement and also ensure that costs are predictable for employers.
They work by both employers and employees contributing to a collective fund, and from this fund individual retirement incomes are drawn.
Minister for Pensions, Guy Opperman, said:
We have seen the positive effect of these schemes in other countries and it is abundantly clear that when they are well-designed and well-run they have the potential to provide a better retirement outcome for members, and can be resilient to market shocks such as the pandemic.
The new scheme has been made possible following the creation of the Pension Schemes Act earlier this year.
Launching a consultation on the new workplace pensions tomorrow, the Department for Work and Pensions is seeking views on the draft regulations, designed to enable the launch of single or connected multi-employer CDC schemes, which will also accommodate the launch of the new scheme that Royal Mail and the Communication Workers Union aim to deliver.
CDC schemes will be subject to authorisation and a supervision regime, this will ensure that only schemes that are well run and built on sound foundations are allowed to operate, and help to build confidence in this new form of occupational pension provision.