Authorisation of sections

CDC code in force: 31 July 2026

1. If a single-employer CDC scheme provides a combination of qualifying benefits with different characteristics, these must be separated and provided from different sections of the single-employer CDC scheme¹. Examples might include:
   1. benefits provided by reference to different rates or amounts for different members
   2. benefits in respect of which the contributions paid by the employer or employee are different
   3. benefits in respect of which the normal pension age differs between members
2. In a multi-employer CDC scheme, if a change to a scheme’s investment strategy would result in materially different benefits, or adjustments to benefits, from those targeted or promoted then that change should only apply to future service benefits, which should be provided from a different section².

Applications from sectionalised schemes

3. Where a combination of qualifying benefits with different characteristics is provided under one scheme, the scheme must be divided into sections with appropriate separation of benefits that have different characteristics³.
4. Where a scheme is divided into sections, a separate authorisation must be obtained for each section that provides qualifying benefits. A separate application will be required for each CDC section. This is required regardless of whether there is any duplication between the evidence required in respect of the CDC section and any other CDC or non-CDC section.
5. When making applications for multiple sections, to ensure an efficient authorisation process, please clearly identify all sections in each application form and ensure all scheme documentation makes it clear which employers (if any) are joining each section. This could be achieved by giving each section a name and having a deed of participation or heads of terms for each employer.
6. Applications in respect of multiple CDC sections can indicate where the same documents and/or information are relevant for more than one CDC section.

Applying for more than one CDC section at initial authorisation

7. Trustees may seek initial authorisation either for a CDC scheme or, if the scheme is sectionalised, authorisation for each CDC section. CDC authorisation applies separately for each section providing qualifying benefits. A separate application is therefore required for each CDC section. Trustees must submit evidence about the authorisation criteria for each CDC section for which they are seeking authorisation, regardless of whether there is any duplication between sections.
8. Multi-employer CDC schemes only: where a scheme is sectionalised at the outset, we expect the trustees to provide full details of how each section is set up, including accruals and benefit rates, in the application for the relevant section.

Explain how the CDC sections differ

9. When applying for authorisation of a CDC section, trustees should explain in a separate mapping document how each of the CDC sections that make up the scheme differ from one another. This document will need to describe the following:
   1. The reasons for having multiple CDC sections.
   2. The level of shared management dependency across multiple CDC sections, including whether: 
      1. there are the same or separate systems and processes in place across all CDC sections
      2. the same individuals who are subject to fit and proper person requirements are common across all CDC sections
   3. Any differences in scheme design between CDC sections, as each section will be assessed on its own merits for soundness and financial sustainability.
   4. The strategy for communicating with members across multiple CDC sections, highlighting the subject areas that will be common to all CDC sections or specific to one or more CDC sections.
   5. The strategy for promotion and marketing and how this will work across multiple CDC sections (where relevant).

Further sectionalisation

10. In a multi-employer CDC scheme, sectionalisation (or further sectionalisation) may also be required if the rates or amounts by reference to which the qualifying benefits are provided each year are either materially different as a result of a change to the scheme’s investment strategy, or subject to materially different expected adjustments as a result of a change to the scheme’s investment strategy⁴.
11. If a multi-employer CDC scheme is required to divide into sections in the circumstances described above⁵, the existing authorisation will attach to the section of the scheme that provides qualifying benefits by reference to the same rates or amounts and using the same expected adjustments to those rates or amounts as the undivided scheme (or if there are two such sections, such section as the trustee may determine). In this situation, the trustee must notify us as soon as reasonably practicable which section the authorisation will apply to and from when.

Application fee

12. When submitting applications for multiple CDC sections, we expect the trustees to specify which section the standard fee (£77,000 at the time of publication) will apply to⁶.
13. The fee for authorising each additional CDC section is calculated on a cost-recovery basis and will not exceed the standard fee⁷.
14. We will check that each section’s application is complete and tell you within seven days if anything is missing. As part of this check, we will assess the additional work and complexity involved in evaluating each additional CDC section. We will then specify a non-negotiable fee for each additional CDC section. The total application fee for all sections of the scheme should be paid at the same time.
15. It is in trustees’ interests to clearly state the commonality and differences between the CDC sections in the mapping document so we can accurately assess how much resource is required to authorise each section.
16. If applications are made for more than one CDC section, the standard fee must be designated to one application and we may specify the fee for each other application. The fee for authorising each other CDC section is calculated on a cost-recovery basis and will not exceed the standard fee⁸. We may also specify the fee if there is already an authorised CDC section for which a standard fee has been paid.

Applications for a new CDC section to be added to an authorised CDC scheme

17. When assessing a new CDC section to be added to an already authorised CDC scheme (or scheme with already authorised CDC sections), the trustee should provide a mapping document as described in paragraph 9 above.
18. When trustees apply for a new CDC section for a scheme that has not previously been divided (an undivided scheme), the existing authorisation will apply to a section of the scheme if:
    1. that section is a collective money purchase scheme
    2. the rate or amounts by reference to which the qualifying benefits provided under that section of the divided scheme are provided each year under the scheme, and the expected adjustments to those rates or amounts, are the same as those provided for under the undivided scheme⁹
19. If there are two or more CDC sections that meet the criteria in ‘b’ above, the trustees should inform us which section they believe the existing authorisation should apply to and apply for authorisation of the other section or sections.
20. Trustees must submit evidence for all the authorisation criteria for a new CDC section, even if there is duplication with a previously authorised CDC scheme or section¹⁰.

Application fee for adding new sections

21. The fee will be based on the approach outlined above for the additional CDC sections of a sectionalised scheme and will:
    1. be calculated on a cost-recovery basis not exceeding the standard fee¹¹
    2. be based on an upfront assessment of the level of duplication between the new and an existing CDC scheme or CDC section to estimate the level of analysis required
22. If there is a high level of commonality with an existing CDC scheme or CDC section, then the learning gained through supervising the existing CDC scheme or CDC section should help reduce the resource and time required to assess the new application.

Legal references

¹ Section 3(8) of the Pension Schemes Act 2021 and Regulation 4(1) of the 2022 Regulations

² Regulation 27 of the 2025 Regulations

³ Section 3(8) and Section 5 of the Pension Schemes Act 2021

⁴ Section 5 of the Pension Schemes Act 2021, Regulation 4 of the 2022 Regulations and Regulation 27 of the 2025 Regulations

⁵ Section 3 of the Pension Schemes Act 2021 and Regulation 27 of the 2025 Regulations

⁶ Section 5(2)(b) of the Pension Schemes Act 2021 and Regulation 28 of the 2025 Regulations

⁷ Section 8(4)(c ) of the Pension Schemes Act 2021 and Regulation 7 of the 2022 Regulations and Regulation 30 of the 2025 Regulations

⁸ Regulation 7(4) of the 2022 Regulations and Regulation 30(4) of the 2025 Regulations

⁹ Regulation 5(3) of the 2022 Regulations and Regulation 28(2) of the 2025 Regulations

¹⁰ Section 5(2) of the 2022 Regulations

¹¹ Regulation 7(4) of the 2022 Regulations and Regulation 30(5) of the 2025 Regulations

Back to top

Thanks for your feedback.