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Title: Generalized design framework for collective defined contribution pension plans and benefit smoothing mechanisms
Date: June 5th, 2025
Time: 9:30am
Location: LIB 2020
Supervised by: Barbara Sanders & JF Begin

Abstract: Existing literature on collective defined contribution (CDC) pensions typically contrasts two approaches to intergenerational risk-sharing: full and immediate experience recognition, prioritizing benefit security (e.g., variable payment life annuities and group self-annuitization plans), and indefinite deferral of experience to maximize smoothing (e.g., the Royal Mail CDC plan). This report introduces a generalized design framework encompassing both CDC arrangements with ongoing contributions and decumulation-only structures for retirees entering with preexisting assets. By incorporating two key parameters—the immediate experience recognition rate and the smoothing window length—the proposed framework allows plan designs to exist along a spectrum between these extremes. A comprehensive set of performance metrics is used to assess benefit security, stability, and intergenerational equity. We demonstrate how adjusting the immediate experience recognition rate and the smoothing window length enables stakeholders to explore the trade-offs between objectives and fine-tune plan designs to align more closely with regulatory goals and welfare considerations.