Processes

CDC code in force: 31 July 2026

1. Regulations¹ set out the matters that we must take into account in deciding whether we are satisfied that a CDC scheme’s processes are sufficient to ensure that it is run effectively². This code uses the term processes to mean policies, processes and procedures. These processes underpin the governance framework, and we expect to see them reflected in that framework.
2. If a CDC scheme does not have all the relevant processes, we are unlikely to be satisfied that the authorisation criteria have been met. Once the scheme has entered live running, we should be able to see evidence that the processes are used in running the scheme and that they are effective.
3. We should be able to see provision for processes to remain sufficient and for it to be clear how and when they will be reviewed.
4. In assessing processes, we are more likely to be satisfied where the following matters are addressed.

Managing the trustee board

Trustee recruitment

5. It is clear who is responsible for the recruitment and selection process and what input is required from other parties.
6. It is understood which skills and competencies need further development on the trustee board and how this is monitored over time.
7. There is a succession plan to maintain the skills and competencies needed by the trustee board.
8. The principles for determining trustee remuneration are assessed and agreed.
9. There is an agreed budget for trustee training.
10. Fitness and propriety are assessed on an ongoing basis, along with any potential conflicts of interest and how these are managed or resolved.
11. A resignation and removal policy is in place. This makes clear who can remove a trustee or member of the trustee board, how, and under what circumstances.

Diversity and inclusion

12. Trustee boards benefit from access to a range of skills, views and expertise as that supports robust discussions and decision-making.
13. There should be evidence that:
    1. there is a policy on diversity and inclusion
    2. the policy includes objective selection criteria
    3. inclusive language has been considered when advertising for roles
    4. flexible working has been considered for roles
    5. there is the ability to capture and monitor data on diversity and inclusion

Trustee governance

14. There is clarity on:
    1. the frequency of trustee meetings and under what circumstances this may change
    2. the circumstances where extraordinary meetings may be called and how
    3. trustees’ expectations in preparing for meetings and the actions needed in between them
    4. who is responsible for setting the agenda and frequency for trustee meetings and who else is consulted in developing an agenda (for example trustees, employers, or in multi-employer CDC schemes, the scheme proprietor)
    5. standing agenda items
    6. the minimum number of people officially required (quorum) to be present at trustee meetings
    7. how the trustees make decisions and how the process conforms with the scheme’s rules, and the memorandum and articles of the trustee company
    8. who decides in a scenario where both the employer and trustee have an interest, including a clear process for trustees to express and record their views if the decision falls to the employer, or in multi-employer CDC schemes, the scheme proprietor
    9. the process for notifying trustees (and the scheme proprietor in multi-employer CDC schemes) of breaches of the law, and the corresponding process for monitoring breaches and determining whether they should be reported to us
    10. the process for notifying trustees (and the scheme proprietor in multi-employer CDC schemes) of significant events and triggering events and reporting them to us

Managing service providers³

15. Service providers are assessed before appointment, including due diligence carried out as part of the appointment process.
16. In multi-employer CDC schemes, the trustees must let the scheme proprietor know about the appointment of contract and service providers (for example, investment consultants and actuarial advisers), their roles and responsibilities, and their removal.
17. Performance indicators are agreed and documented on appointment. The service provider is accountable, with escalation points, for ensuring the indicators are met.
18. The performance indicators are reviewed regularly by an appropriate person, outcomes are recorded, and all actions are allocated and tracked.
19. Service providers and advisers are kept under review. This includes having detailed criteria for assessment, and if applicable, key performance indicators (KPIs) and service level agreements (SLAs).
20. Trustees can show how they establish that their service providers are sufficiently qualified and experienced to meet the needs of the scheme. This may include evidence of the checks carried out by service providers on new staff and how tender processes are operated.
21. The role of the trustee board and employer is clear if a decision is needed to replace any service provider.
22. The terms of appointment of each service provider include clear lines of responsibility for ensuring a smooth handover over an appropriate timescale, with no interruption of service if the service provider is replaced.
23. There is a clear process for ensuring information about the performance, evaluation and ongoing suitability of service providers, including any issues or concerns, are brought to the attention of the trustees in a timely manner. This should include:
    1. mapping out of lines of communication
    2. documenting key members of staff from both parties to be communicated with
    3. the decision-making responsibilities or delegations of key members of staff
    4. a clear remuneration policy that is followed to assess whether service providers are delivering good value
    5. trustees’ understanding of the contracts and agreements with all service providers to the scheme. This includes impacts on service or ability to act. There is a written process documenting how these contract and agreements are updated and agreed

Planning resources

24. All key administrative tasks are fully documented with detailed end-to-end processes. This includes the timely sending of notifications and documents to us.
25. These process documents and maps are reviewed regularly, particularly as part of a system or process change, to ensure that enough human resources are allocated.
26. Key resources have been identified, with the skills and experience to effectively run the scheme and in multi-employer CDC schemes, to deliver the objectives in the business plan⁴. There is a plan in place to ensure continuity of service provision, for example if key staff leave.
27. There is awareness of the timeframes required to bring new human resources on board and what contingency is in place to mitigate any under-resourcing due to increased work volumes or loss of staff.

Administration

Record-keeping

28. The process directs how records are kept up to date. Exception reporting is in place to ensure that errors and gaps are reported to the relevant governance function.
29. There is a plan to rectify data errors, and the continuity strategy reflects the impact of data quality in the scheme.
30. There is evidence of service provider agreements that include provisions, roles, responsibilities and source of funds for resolving errors that impact members.
31. The process sets out the action that will be taken to put members in the correct position if errors or inconsistencies are found.

Member events

32. There are documented processes for member events including leavers, deaths, retirement and transfers.
33. There are processes for automatic enrolment events, such as opt-outs or re-enrolment.
34. There is a process for managing member events and choices during a triggering event.

Annual valuations⁵

35. There is a process for producing and checking the annual valuation data extract, which ensures it is complete, accurate and timely.
36. There is a process for:
    1. loading valuation data onto the administration system, including any benefit adjustments
    2. notifying members of any adjustment to their benefits

Missed contributions

37. There is a process for quickly identifying and chasing missing employer or employee contributions.
38. In the event of an employer insolvency or claim on the Redundancy Payments Service, there is a process for reclaiming any outstanding contributions from employer assets.
39. There is a process for rectifying and remedying any unpaid contributions.
40. There is a process for reporting and explaining material missed contributions to us.
41. There is a log of missed contributions, which includes actions taken in response to the missed contributions.

Investment⁶

Investment governance

42. The trustees, on an ongoing basis:
    1. take adequate advice from appropriate advisers
    2. can show a logical connection between the trustees’ declared investment philosophy and the investment strategy being pursued
    3. can show they have the necessary expertise to fulfil their fiduciary responsibilities as they relate to investment
    4. can show a thorough understanding of the investment strategy from the perspective of risk, return, markets, asset class, and outcome
    5. have a process for managing real or perceived conflicts of interest in the governance framework
    6. will identify any deviation from the agreed investment strategy guidelines that would have required their approval immediately
    7. address any material breaches of the investment management guidelines they have contractually agreed to with their suppliers
    8. have processes to effectively analyse and review their investment strategy
    9. have a policy on environmental, social and governance (ESG) issues and climate change

Managing the investment function

43. It is clear who manages the key investment functions and who the responsible person is for:
    1. providing investment advice
    2. the investment management guidelines and permissions
    3. implementing all aspects of the investment management strategy and subsequent oversight of it
    4. ownership of the investment governance framework
    5. design and ongoing review of the investment strategy
    6. portfolio construction, for example multi-asset or fund of funds structures
    7. selecting investment managers and their ongoing review cash flow management
    8. processes to implement change to the investment strategy

Investment data

44. There is sufficiently detailed information to enable trustees to monitor investments effectively, including:
    1. evidence of adherence to the investment management agreements that the trustees enter into with the various suppliers of investment services
    2. details of the investment returns and the risk profile of the investment strategy, which are consistent with their stated objectives
    3. a suitable range of risk metrics, which trustees use to inform their ongoing assessment of returns
    4. detailed performance attribution analysis of the investment strategy, including benchmark and peer group relative performance
    5. details of any material breaches of investment guidelines and corrective action taken to prevent reoccurrence, together with any agreed restitution
    6. a framework that enables trustees to assess the continued suitability of the
       investment strategy

Risk management⁷

45. There is an ongoing process for identifying, recording, measuring, monitoring, prioritising and resolving actual and perceived risks, including investment risks.
46. In single-employer CDC schemes, appropriately skilled individuals are responsible for monitoring risk against the work planned and the scheme’s aims and objectives. In multi-employer CDC schemes, the scheme proprietor is responsible for monitoring risk to the delivery of the business plan. In each case, the responsible individuals have access to the management information and intelligence they need to carry out this task properly.
47. Information and relevant data are received regularly (at least quarterly) from the appropriate responsible person to enable the risk register to be properly updated and investment risk analytics to be monitored.
48. The trustees have documented how issues identified through risk management will be resolved by the responsible persons.
49. There is a risk register to support the ongoing monitoring of risks and it has been considered and agreed in single-employer CDC schemes, by the trustee board, and in addition in multi-employer CDC schemes, by the scheme proprietor.
50. The risk register is regularly reviewed in detail by trustees and:
    1. considerations and decisions are documented
    2. ownership and actions are assigned
    3. timelines for delivery are agreed
51. An annual review is conducted to ensure no additional risks have emerged that should
    be included on the risk register.

Actuarial⁸

Annual exercises

52. There must be effective processes for actuarial matters.
53. The annual valuation is the backbone of scheme work and we expect to see:
    1. a plan for managing the valuation process
    2. a process for managing benefit adjustments
    3. clear timings by which each stage of the work should be completed
    4. the authorisations required for each stage and the persons able to give them
    5. provision to give adequate notice to pensioner members if their income is adversely affected
    6. a process for completing the viability certificate and alerting all relevant parties, including us, if concerns are identified

Legal references

¹ Section 16 of the Pension Schemes Act 2021

² Sections 9(3)(e) and 16 of the Pension Schemes Act 2021

³ Schedule 5 to the 2022 Regulations and Schedule 5 to the 2025 Regulations

⁴ Paragraph 10(d) of Schedule 5 of the 2025 Regulation

⁵ Section 16 of the Pension Schemes Act 2021, Regulation 14 and Paragraph 13 of Schedule 5 of the 2022 Regulations, and Regulation 37 and Paragraph 12 of Schedule 5 of the 2025 Regulations

⁶ Section 16 of the Pension Schemes Act 2021, Regulation 14 and Paragraph 12 of Schedule 5 of the 2022 Regulations, and Regulation 37 and Paragraph 11 of Schedule 5 of the 2025 Regulations

⁷ Regulation 14 and Paragraph 9 of Schedule 5 of the 2022 Regulations and Regulation 37 and Paragraph 8 of Schedule 5 of the 2025 Regulations

⁸ Regulation 14 and Paragraph 13 of Schedule 5 of the 2022 Regulations and Regulation 37 and Paragraph 12 of Schedule 5 of the 2025 Regulations

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