The Government has announced plans for a national collective pension scheme for care workers, intended to provide greater stability in retirement and make care a more attractive long-term career. The Department of Health and Social Care will work with pensions providers, unions and social care employers to establish the scheme.
Trade unions and provider bodies have responded positively, although providers have stressed that the practical arrangements will be important, particularly given the diversity of organisations delivering care.
For providers, the challenge will be in translating that ambition into an affordable and workable benefit. Much will depend on who can participate, what contributions are required and how the scheme interacts with existing pension arrangements.
What is being proposed?
The proposal would bring workers from different adult social care providers into a shared pension arrangement across the sector. It forms part of a broader commitment to improve pay and working conditions, following concerns raised by UNISON that low pay and widespread part-time working have left many care workers without sufficient pension savings.
At the time of writing, detailed eligibility rules, contribution rates and an implementation timetable have yet to be announced. It also remains unclear how the scheme would interact with or replace existing workplace pensions, whether employers or employees would contribute more than under existing arrangements, and whether additional government funding would be available.
Providers should therefore avoid assuming that every worker will be included. The treatment of agency staff, personal assistants and employees already participating in public-service pension schemes should be among the points to check as proposals develop.
Would the scheme be collective defined contribution?
Collective defined contribution (CDC) is a possible model for the scheme. However, the Government’s announcement refers to a “national collective pension scheme” without confirming its final legal structure.
CDC schemes, known in legislation as collective money purchase schemes, pool contributions and investments to provide retirement benefits collectively. Unlike an individual defined contribution (DC) pension, where each worker builds up their own pension pot, investment and longevity risks are shared across members.
In addition, CDC does not offer an employer-backed promise of a specified pension. Benefits are targets, not guarantees, and can be reduced under the scheme’s adjustment rules, including after pension payments have begun. Simply using one pension provider across several employers would not make the proposed scheme CDC; the way benefits are calculated and adjusted is central.
For care workers, the distinction matters because sharing risks would not guarantee a particular retirement income. For providers, a CDC model would not normally involve a defined benefit-style obligation to make good a shortfall against target benefits. However, employers could still have obligations concerning agreed contributions, scheme costs or participation arrangements. Providers should therefore review the eventual terms rather than assume that their financial exposure would be limited to a headline contribution rate.
Who would be covered, and when?
The proposal has been reported as applying to care workers in England. Whether Scottish employers and workers could participate remains to be clarified. Providers operating across the border should therefore await the detailed eligibility rules rather than assume that a “national” scheme would cover their entire workforce.
The wider framework for multi-employer CDC schemes is already in place, with The Pensions Regulator’s revised code taking effect on 31 July 2026. This does not establish a launch date for the proposed care-worker scheme. Providers should watch for details of how the scheme will work and be funded, any consultation or further legislation and the process for employers and workers to join.
What would make the scheme effective?
The scheme’s success will depend on a design that reflects the needs of the care workforce and the range of employers across the sector. The Centre for Care’s briefing highlights issues including portability, access and contribution adequacy. Alongside these, practical considerations such as administration and communication will be important.
Remaining in the same scheme when moving between participating care providers could simplify pension saving and reduce separate small pots. Clear arrangements would also be needed for workers with multiple jobs or those leaving the sector.
Access and affordability also matter. Eligibility rules and the treatment of low or variable earnings will likely determine the scheme’s reach. Contributions would need to balance meaningful retirement benefits with affordability for workers and providers.
Simple administration, payroll compatibility, clear reporting requirements and sufficient implementation time would help make participation workable, particularly for smaller providers.
Building confidence would require accessible explanations of contributions, benefits and job changes. If a CDC model is adopted, communications should clearly distinguish a target pension from a guaranteed income.
These are design considerations, not confirmed features. A national scheme could simplify provision, but its value will depend on sustainable funding, manageable administration and benefits that workers understand.
What could this mean for providers?
Employers should model costs across contribution rates and participation levels, including pensionable pay definitions and administration charges. Additional costs should inform workforce budgets and, where relevant, discussions about commissioning fees. Providers should not assume that additional funding through commissioning arrangements will cover these costs.
Existing automatic-enrolment duties continue. Employers would also need to assess how participation fits with existing pension arrangements and contractual commitments. For outsourcing or service transfers, providers should separately check transferring staff’s pension protections, including contractual and public service pensions requirements: the new scheme should not be assumed to satisfy these.
If a CDC model is adopted, the scheme would require authorisation from The Pensions Regulator. Providers should clarify the division of responsibilities between scheme operators and employers, particularly for enrolment, payroll and contribution payments.
Data protection also matters. ICO guidance highlights the need to explain information-sharing with pensions providers, share only what is necessary and restrict access appropriately.
If you would like to discuss anything raised in this blog in more detail, please get in touch with a member of the pensions team or your usual Brodies contact.
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