Financial sustainability: overview

CDC code in force: 31 July 2026

1. All CDC schemes must be able to demonstrate they have access to sufficient financial resources to cover their set up and running costs. They must also have sufficient financial resources to cover the costs arising from a triggering event. A CDC scheme that is unable to meet the financial sustainability requirements at any point may not satisfy us that it should remain authorised.
2. It is up to the trustees to demonstrate that they can meet the financial sustainability requirements¹. These can be demonstrated in different ways. We will expect schemes to provide relevant evidence to support their calculations.
3. Some schemes may rely entirely on their own resources to meet the financial sustainability requirements, whilst others may rely on the support of third parties. For example, single-employer CDC schemes, may maintain close links with participating employers and be able to call on those employers to provide financial resources to the scheme and multi-employer CDC schemes may be more akin to a retail product and rely on the resources of a third party scheme proprietor for support.
4. Where a single-employer CDC scheme relies on employer support, the trustees must demonstrate that they, together with the employer, can meet the financial sustainability requirements. Our expectations in relation to employer support are set out in Financial sustainability: Employer support.
5. Where a multi-employer CDC scheme, relies on a scheme proprietor for support, they must demonstrate that they, together with the scheme proprietor can meet the financial sustainability requirements. Our expectations in relation to proprietor support are set out in paragraph 10 below.
6. Trustees must demonstrate that any commitment of support is legally binding and that they have first call over committed assets.
7. The scheme’s trust deed, rules or deeds of participation may impose financial obligations on participating employers or third parties, or on the scheme itself. Depending on their interaction with the provisions of the Pension Schemes Act 2021, appropriate allowance should be made for these when calculating the financial sustainability requirements.
8. Our assessment of each scheme’s financial sustainability will also consider the evidence presented in relation to systems and processes, and the continuity strategy.

Information that we require in assessing financial sustainability²

9. For all schemes we require sight of, and will consider:
   1. the scheme accounts (if any)
   2. the scheme’s costs, assets and liquidity plan (CALP)
   3. evidence of any financial reserves held for supporting running costs and costs of compliance following a triggering event
   4. relevant extracts of the scheme’s trust deed and rules, which govern expenses and winding-up arrangements
   5. details of service contracts and insurance policies held by the trustees
   6. details of any loans
   7. any other documents that the scheme can show to be relevant

Multi-employer CDC schemes only: additional information that we require in assessing financial sustainability³

10. In relation to multi-employer CDC schemes only, we require sight of, and will consider:
    1. full audited accounts of the scheme proprietor (where available) as set out in Scheme proprietor: Accounts
    2. the scheme’s business plan
    3. any documentary proof of support being offered by the scheme proprietor
    4. details of any joint bank account or escrow held by or on behalf of the trustees and proprietor
    5. any other documents that the scheme can show to be relevant
11. In relation to multi-employer CDC schemes only, we require sight of, and will consider:
    1. documentary proof of any support offered by the employer(s)
    2. details of any joint bank account or escrow held by or on behalf of the trustees and scheme provider
12. Where the scheme proprietor of a multi-employer CDC scheme is supported by debt issuance, we may have to understand the ability of the scheme proprietor to support repayment terms of the debt while maintaining support for the multi-employer CDC scheme itself.

Legal references

¹ Section 14(2) of the Pension Schemes Act 2021

² Regulation 12 and Parts 2 and 3 of Schedule 3 to the 2022 Regulations and Regulation 35 and Parts 2 and 3 of Schedule 3 to the 2025 Regulations

³ Sections 14(3A), 14(3B), and 14(3C) of the Pension Schemes Act 2021

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