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Fitness and propriety: overview

CDC code in force: 31 July 2026

  1. Those fulfilling various roles in relation to a CDC scheme must show that they meet satisfactory standards of fitness and propriety1. For a scheme to be (and remain) authorised we need to be satisfied that all relevant individuals can show the appropriate skills and characteristics on their appointment and throughout supervision. If the relevant individuals change at any time after authorisation, the newly appointed individual must also be assessed as fit and proper.
  2. For single-employer CDC schemes, the 2022 Regulations, and for multi-employer CDC schemes, the 2025 Regulations, set out the matters we must consider in our assessment2. We may also take into account such other matters as we consider appropriate, including matters relating to connected persons3.
  3. Each individual subject to the assessment must provide a declaration and criminal conviction certifcate4. The other evidence we require will vary from role to role. We will also take into account:
    1. evidence of competence
    2. statements of development
    3. evidence of qualifications or learning programmes
    4. other relevant professional experience
    5. matters we consider appropriate, including those relating to a connected person5
    6. matters that occur in and outside the UK
  4. The application must:
    1. identify each person subject to a fit and proper test6
    2. ensure that we receive sufficient evidence about them for us to complete our assessment
    3. demonstrate the steps that the trustee has taken to carry out due diligence (to the extent possible) to determine whether the relevant persons meet the requirements to be fit and proper, and identify any action needed

Separation of functions (multi-employer CDC schemes only)

  1. The Pension Schemes Act 2021 requires that certain functions in relation to a multi-employer CDC scheme may not be undertaken by a trustee of the scheme, or any member of a trustee board. This is to help ensure that appropriate standards of governance and oversight are maintained, that potential conflicts of interest are limited, and ultimately, that decisions taken on behalf of the members are taken in their interests alone and free from commercially influenced pressures.
  2. A trustee of a scheme is not permitted to:
    1. be the scheme proprietor7
    2. promote or market the scheme8
    3. act as chief financial officer of the scheme9
  3. Although they are unable to perform these functions, we expect trustees to maintain their usual standards of knowledge and understanding of these functions and provide appropriate challenge to those performing them.
  4. The application for authorisation must include a statement signed by the trustees confirming that the scheme proprietor meets the requirements set out in section 14(C) of the Pension Schemes Act 2021, which includes a requirement that the scheme proprietor is not a trustee of the scheme10. The application must also include a statement confirming that no trustee promotes or markets the scheme or acts as a chief financial officer of the scheme11.
  5. We will also expect the application to include:
    1. an illustration of the scheme’s governance structure to understand how the trustees will interact with the persons carrying out the functions specified above
    2. where a corporate entity carries out a function, confirmation of the person to whom each of the people carrying out management and executive roles is accountable
    3. confirmation of who is responsible for the appointment of persons to perform each function

Identifying who is subject to the fit and proper test

  1. The Pension Schemes Act 2021 sets out the persons who we must assess12 at authorisation and during supervision. For multi-employer CDC schemes only, there is a further category of persons that perform ‘core functions’ in respect of the scheme, that we may assess at authorisation and during supervision as explained in paragraph 14 below.
  2. The application must13 identify any individual, or group of individuals, who perform one or more of the roles mentioned in section 11(2) of the Act. We will assess each of those persons for fitness and propriety. For multi-employer CDC schemes only, the application must also identify any person that performs a core function. We will decide whether we assess those persons for fitness and propriety once the application is received.
  3. Where an individual has more than one role in relation to a CDC scheme that we must assess (or in the case of a core function, we decide to assess), they will be assessed for fitness and propriety in relation to each role. However, in multi-employer CDC schemes only, it is not possible for a trustee to be the scheme proprietor, to market or promote the scheme or act as a chief financial officer for the scheme14.
  4. Where roles are fulfilled by a corporate body (or in multi-employer CDC schemes, a partnership), we must assess individuals exercising a management or executive role, but we will not normally assess the corporate entity or partnership15.
  5. In relation to a multi-employer CDC scheme only, we may assess a person that undertakes a core function. A core function includes a strategic, executive or management role carried out in respect of, or on behalf of, a person mentioned in paragraphs (a) to (d) of section 11(2) of the Pension Schemes Act 202116.

Persons we must assess (as listed in section 11(2) of the Pension Schemes Act 2021)

(a) The person who establishes the CDC scheme

  1. This is the person who is identified in the trust deed and rules as having established the scheme. They may:
    1. have provided the initial financial backing for the CDC scheme
    2. remain connected to the CDC scheme
  2. We will not assess a person who has no decision-making capacity in, or influence over, the scheme.

(b) Trustees

  1. We will assess the following people:
    1. All trustees (including member-nominated trustees) who are appointed as individuals.
    2. All directors (including member-nominated directors) of a corporate trustee of the scheme.
    3. All individuals who perform the functions of the trustee in a management or executive role, including those who perform management and executive roles on behalf of a trustee director that is itself a corporate body.

(c) Persons who can appoint or remove trustees

  1. We will assess all persons identified in the trust deed, or other documents, as having the power to appoint or remove trustees.
  2. We will not normally assess members or employers who vote as part of an election or selection process.

(d) Persons who can amend the trust deed

  1. We will assess all persons identified in the trust deed, or other documents, as having the power to amend the deed.
  2. We will not normally assess:
    1. members who vote on or consent to amendments
    2. employers who can change the admission criteria only for their section or for individual members

(e) Scheme proprietor (for multi-employer CDC schemes only)

  1. We will assess any individuals exercising a management or executive role in relation to the scheme proprietor. We expect that in most cases this will be the directors of the scheme proprietor (or where the scheme proprietor is a partnership, the partners).
  2. We may also assess any individuals who have significant control over the scheme proprietor.
  3. Where the scheme proprietor is a corporate, we will consider an individual to have significant control if they:
    1. hold (directly or indirectly) more than 25% of shares or voting rights in the scheme proprietor
    2. have the right (directly or indirectly) to appoint or remove a majority of directors
    3. have the right to exercise, or actually exercises, significant influence or control over the scheme proprietor’s activities
  4. Where the scheme proprietor is a partnership, we would expect to assess any individual who:
    1. has a right to share in more than 25% of any surplus assets of the entity on winding up
    2. holds more than 25% of the rights to vote on those matters which are to be decided upon by a vote of the members of the entity
    3. has the right to appoint or remove the majority of the persons who are entitled to take part in the management of the entity
  5. We will not normally assess individual employees of the scheme proprietor.

(f) Persons who promote or market the scheme (for multi-employer CDC schemes only)

  1. We will assess any individuals exercising a management or executive role in relation to the scheme’s promotion and marketing function. This will typically include the individual who is responsible for managing and approving communications or campaigns. We may determine that more than one individual should be assessed where, for example, the person who manages content creation and the person who manages the relevant systems and processes are separate individuals.

(g) Chief financial officer (for multi-employer CDC schemes only)

  1. We will assess any person who has significant influence over the management and use of the financial resources of the scheme and/or business decisions relating to any commercial activities of the scheme.
  2. We will concentrate on people who have significant influence and control in these matters, rather than anyone who has a matching or comparable job title.
  3. Because of the nature of the role, it is likely that it will exist in relation to every scheme, regardless of size or business model.

(h) Chief investment officer (for multi-employer CDC schemes only)

  1. We will assess any person who has significant influence over the contents of the scheme’s investment strategy and/or the implementation, management and communication of the scheme’s investment strategy.
  2. We will not assess anyone who fulfils this role only because they are a service provider to the scheme.
  3. Trustees may not always have the capacity or experience to act as chief investment officer. We would therefore be more likely to be satisfied where the chief investment officer is distinct from the trustees. Where a trustee fulfils this role, unconscious biases and conflicts of interest may emerge over time. We expect to see details of how this risk is being managed.

Legal references

1 Sections 9(3)(a) and 11 of the Pension Schemes Act 2021

2 Regulation 8 and Schedule 1 to the 2022 Regulations and Regulation 31 and Schedule 1 to the 2025 Regulations

3 55A Section 11(3)(b) of the Pension Schemes Act 2021

4 Regulation 6(2)(a)(v) of the 2022 Regulations Regulation 29(2)(a)(vi) of the 2025 Regulations

5 Section 11(3)(b) of the Pension Schemes Act 2021

6 Regulation 6(2)(a) and (b) of the 2022 Regulations and Regulation 29(2)(a) and (b) of the 2025 Regulations

7 Section 14C(3) of the Pension Schemes Act 2021

8 Section 9(3)(cc)(i) of the Pension Schemes Act 2021

9 Section 9(3)(cc)(ii) of the Pension Schemes Act 2021

10 Section 14C(3) of the Pension Schemes Act 2021

11 Section 9(3)(cc)(ii) of the Pension Schemes Act 2021

12 Section 11(2) of the Pension Schemes Act 2021

13 Regulation 6(2) of the 2022 Regulations and Regulation 29(2) of the 2025 Regulations

14 Section 14C(3)(c) and section 9(3)(cc) of the Pension Schemes Act 2021

15 Regulation 8(2) of the 2022 Regulations and Regulation 31(2) of the 2025 Regulations

16 Regulations 31(3) and (4) of the 2025 Regulations

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