Mixed benefit schemes

CDC code in force: 31 July 2026

Mixed benefit schemes

1. Mixed benefit schemes are schemes that have sections that provide other money purchase or non-money purchase benefits. Mixed benefit schemes include other schemes authorised by us, such as master trusts.
2. There is no need for each section of a mixed benefit scheme to have a separate scheme proprietor. Our assessment of a mixed benefit scheme in relation to CDC authorisation will focus on the activities of the CDC section. Care should be taken to show how the functions of a CDC section are integrated with, or are separated from, the activities of an authorised master trust.
3. We may consider any commitments made to other sections, such as the strength of employer covenants, where these are relevant to the support being provided to the CDC scheme.
4. Some schemes may have unallocated assets within the scheme that are not used for the provision of benefits. Where the rules of the scheme allow, unallocated assets may be used towards meeting the scheme’s financial sustainability requirements.
5. We may also consider the use of unallocated scheme assets to meet the requirement for scheme proprietors to place assets into a deposit account where they do not have audited accounts¹.
6. We will consider financial sustainability calculations that make allowances for services supplied to authorised CDC sections and master trust sections of the same scheme.
7. The rules of a mixed benefit scheme may provide a priority order for expenses and wind-up costs if the scheme winds up. This can mean that in practice there is cross subsidy between sections of the scheme. We recommend that trustees or scheme proprietor of mixed benefit schemes consider taking legal advice on this matter when preparing their CALP and calculating their financial reserves.
8. The law permits mixed benefit schemes to provide accounts in relation to the scheme as a whole and not just in respect of the CDC section². We may take information provided in relation to other sections into account where we consider it relevant.
9. The functions of scheme funder and scheme strategist in an authorised master trusts are combined into the scheme proprietor for a CDC scheme. Any application for a CDC section of a master trust should be clear on how the respective functions of those bodies will be allocated.

Business plan requirements for mixed benefit schemes

10. In considering whether a multi-employer CDC scheme should be authorised, we will typically only consider the CDC benefits. However, multi-employer CDC schemes may provide other benefits or be part of a scheme that provides other benefits. We should be told where they exist and understand any interaction they have with the CDC benefits.
11. The business plan for mixed benefit schemes must also provide the following additional information:
    1. Details of non-CDC benefits offered by the scheme.
    2. Whether any non-CDC benefits are provided in segregated or separate sections.
    3. Whether any non-CDC benefits are fully segregated, or whether there can be cross subsidies between sections in certain situations (for example winding up), and details of what those cross subsidies are.
    4. Whether there is a recovery plan to address a deficit in relation to a non-money purchase section.
    5. Whether any non-money purchase section is open or closed to new members and/or accrual.
    6. Any non-CDC decumulation options offered by the scheme.

Legal references

¹ Section 14C(5) of the Pension Schemes Act 2021

² Section 39 of the Pension Schemes Act 2017

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