Extending the collective defined contribution (CDC) code of practice: consultation document

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Purpose of the consultation

We are consulting on a draft code of practice that will amend the existing CDC code which applies to single and connected employer CDC schemes (‘single-employer CDC schemes’). The amended version covers the authorisation and supervision of unconnected multiple employer schemes providing CDC benefits (‘multi-employer CDC schemes’).

The draft code focuses on the requirements that trustees and others need to meet if they intend to apply for authorisation or wish to operate a CDC scheme.

Who this consultation is for

This consultation is for anyone seeking to understand what our approach to the authorisation and supervision of multi-employer CDC schemes will be. This will likely include trustees, scheme proprietors, scheme members, pension professionals and those who are looking to establish a multi-employer CDC scheme. We also welcome comments from anyone with an interest in this developing market.

Consultation context

The Pension Schemes Act 2021 introduced the legislative framework for single-employer CDC schemes within the United Kingdom. Following this the Department for Work and Pensions (DWP) introduced the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 (‘2022 regulations’) to provide further detail on the authorisation process for, and supervision of, single-employer CDC schemes.

The legislative framework has now been further expanded to include an authorisation and supervision regime for multi-employer CDC schemes. The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 (‘2025 regulations’) were published on 23 October 2025.

The legislation facilitates the protection of savers through an expanded authorisation and supervision regime for multi-employer CDC schemes. As such, for a scheme to be authorised and remain authorised, we must be satisfied that they meet the relevant criteria. These include a requirement to have a scheme proprietor who is responsible for meeting certain costs and preparing a business plan for the scheme. There are also sections extending fitness and propriety checks to new categories of individuals, and new authorisation criteria relating to the promotion and marketing of schemes.

This consultation is in relation to the content of the draft code, which outlines the criteria, our expectations, and the procedures we expect to follow when determining whether or not authorisation must be granted to prospective CDC schemes. We do not wish to introduce unnecessary duplication into our codes of practice. For this reason we have taken the decision that the code on which we are consulting will completely replace the current CDC code. The new code will apply to authorisation and supervision of both types of CDC scheme. It should be clear which aspects apply to both types of schemes and which apply only to either single-employer CDC or multi-employer CDC schemes.

We are also updating the current content to reflect changes to the 2022 regulations made by regulations 58 to 77 of the 2025 regulations.

While the introduction of multi-employer CDC schemes is a significant extension to the types of pension scheme available to employers, our role in authorising them does not represent a significantly new way of operating for us. Many aspects of the draft code will be familiar as the approach to authorisation and supervision reflects those adopted for single-employer CDC schemes and master trusts in many areas.

The purpose of the draft code is to provide trustees with the clarity they need on how to apply for authorisation, and the matters that will be taken into account in deciding whether a CDC scheme should be authorised and should remain so.

Presenting our expectations

Our eventual ambition is to align our codes for authorised schemes as far as practical, and to incorporate them into our general code of practice. Therefore, to facilitate future changes, alignments and transposition, and for ease of use, the draft code adopts the modular format of the general code, with each module relating to different aspects of the authorisation criteria.

The draft code sets out:

how to make an application for authorisation
the matters we will take into account when considering applications
our expectations for the conduct and practice of those who must comply with the obligations set in pensions legislation

It does not cover all aspects of pensions legislation. Therefore, trustees will be expected to seek the help of advisers and look beyond this code to help them understand all their legal obligations.

We make a clear distinction between legal duties and our expectations within the draft code by using the word ‘must’ when referencing legal duties, and ‘should’ and ‘expect’ for our expectations. We use ‘need’ where the process is necessary to allow a scheme to operate even though there is no expectation or legal requirement in place.

The 2021 Pension Schemes Act sets out that a scheme applying for authorisation must satisfy us that they meet the criteria to be authorised. In view of this, the language we have chosen to use is that schemes are, for example, ‘more likely’ or ‘less likely’ to satisfy us. This enables circumstances where single-employer CDC and multi-employer CDC schemes may be able to justify a particular or different approach.

Government consultation principles

For the purposes of this consultation paper, we are following the government consultation principles.

The key principles state that consultations should:

be clear and concise
have a purpose
be informative
be only part of a process of engagement
last for a proportionate amount of time
be targeted
take account of the groups being consulted
be agreed before publication
facilitate scrutiny
be responded to in a timely fashion
not be launched during local or national election periods

Responding to the consultation

We are conducting this consultation in a digital format and encourage you, where possible, to use our online survey (opens in new tab) to respond to the consultation.

If you are unable to use this format, please use the options below to respond. Note that we are not providing a separate form to complete (other than the online survey).

Please submit your response by midnight 13 February 2026.

You can email your response to: cdcpolicy@tpr.gov.uk.

Or send it by post to:

Nick Gannon
The Pensions Regulator
Telecom House
125-135 Preston Road
Brighton
BN1 6AF

If you have any questions about the consultation process, please contact Nick Gannon at nick.gannon@tpr.gov.uk.

When responding, please confirm:

if you are responding as an individual or on behalf of an organisation
if on behalf of an organisation, whether your answers reflect your personal views or the official views of the organisation

You should also provide:

your name
organisation name and type (if applicable)
job title
email address
confirmation of whether we can list you or your organisation as a respondent

If you want your response to remain confidential (in part or in whole), you should specify this and let us know why.

We will review all responses carefully and publish our response to the feedback received.

Consultation questions

General questions

Do you agree with our approach to replacing the existing CDC code with a code that covers both single-employer and multi-employer schemes?
Do you foresee any issues with this approach?

The authorisation of CDC schemes is based around criteria that are set out in the 2021 Act and the 2022 and 2025 regulations. The draft code is structured around the criteria as they appear in the legislation, providing more information about what we expect a scheme to be able to demonstrate. However, there is a significant interplay between the various authorisation criteria. For example, the continuity strategy is closely intertwined with the scheme’s financial sustainability.

Our intention is that users should be able to clearly identify places where they may need to consider other elements of the authorisation criteria. In doing this though we are aware that closely related items may not appear next to each other and may require a degree of cross referencing. This is inevitable in an integrated authorisation framework, but we want to be sure that users can find the information that they need.

Our code highlights the areas of legislation that require expansion in order that schemes can clearly identify what we will require in authorising and supervising a scheme. This means that some areas of the legislation are not fully explored in code. We may also not be able to fully address our expectations, for example in terms of format of responses, in code which is not as easy to adapt as guidance. We believe, based on experience of authorising other schemes, that we have provided potential market entrants with sufficient information to make an application and to remain authorised if successful. However, we are interested to understand if there are any areas that require additional explanation, or relocation.

Do you consider that any important areas of the authorisation criteria require additional explanation or guidance?
Are there any sections or paragraphs of the code that should be relocated to make them easier to use?

Section-specific questions

Introduction, applying for authorisation, authorisation criteria and sectionalisation

The introductory section serves as the starting point to the code and provides an oversight to the authorisation criteria, and supervisory basis. It also sets out an explanation of what we will expect in any application that we receive from a prospective market entrant. In due course, when the final code is published online, it will provide convenient access to key modules and sections throughout the code.

This section also contains some expectations regarding sectionalisation. Sectionalisation takes place where a scheme wishes, or is required, to offer a different set of benefits or different investment strategy to a particular group of members. We have chosen to keep our expectations around sectionalisation at a relatively high level. This is because the legislation allows sectionalisation for a variety of reasons and we do not wish to unnecessarily stifle the creativity of the market for providing solutions to workers. Where sections are providing CDC benefits they will have to be separately authorised. However, this authorisation will take into account any overlap of authorisation criteria with existing sections of the scheme.

Is the explanation and level of detail we have set out in this section sufficient?

Sectionalisation may be used to provide a mix of CDC and non-CDC benefits from within the same scheme. This may appeal to existing schemes that wish to create a CDC section. It might also be used within a CDC scheme to provide complementary benefits within an overall package of mixed benefits. This might appeal where schemes were looking at ways to provide, for example, a top-up arrangement, a cash fund or dependants’ benefits.

Is it clear what constitutes a section and when you must divide a scheme into multiple sections?
Is it clear how the authorisation fee will be set for schemes with multiple sections?
Is it likely that existing schemes will set up a CDC section and do we need further consideration of such mixed benefit schemes?

Systems and processes

This is a very broad topic area, covering not just practical but also procedural matters and the ways they are implemented and maintained. Our expectations of schemes in relation to systems and processes are broadly unchanged from single-employer CDC to multi-employer CDC schemes. However, within that there will be an expanded scope to cover things such as receipt of contributions from multiple employers on different days.

It seems almost certain that multi-employer CDC schemes will come to authorisation with untried, untested and potentially unbuilt systems. This is a consequence of a new scheme type and in the short term will be unavoidable. However, we have set out to provide alternative ways that trustees can demonstrate that their scheme meets the necessary standards. We will also explore different approaches that may assist schemes in satisfying us.

Is the level of detail we have set out sufficient for schemes to meet our expectations for systems and processes?
Are there any industry standards or other approaches that could be used to satisfy us that a scheme is meeting our expectations?

Fitness and propriety

The principles of the actual tests of fitness and propriety remain unchanged from the single-employer CDC scheme regime. The main change is that the 2025 regulations introduce new roles for multi-employer CDC schemes that are subject to fitness and propriety checks. These roles include the scheme proprietor, chief investment officer and chief financial officer. The draft code sets out what these roles are, although it will be up to applicants to establish who fulfils the roles in their scheme.

In each case we have sought to provide sufficient information for a scheme to identify who fulfils a particular role, and our expectations of appropriate skills and expertise for each role. It is our intention that only the accountable person in each case should be subject to fitness and propriety checks, rather than the wider team, or staff members in the same department. However, we recognise that there may be instances where more than one person does fit the description. This might include the board of the scheme proprietor, or investment officers who have a mandate to invest in a particular way in respect to a share of the scheme assets.

We would be interested to understand how common such instances may be. We would also be interested to understand whether having multiple accountable people is a desirable outcome, or if we should focus on a more limited number of accountable people. If we were to focus on a very limited number of accountable people, would schemes already have these roles in place, or would they have to be created, with the risk of introducing complexity into governance arrangements?

The legislation anticipates situations where the trustees act as the chief investment officer. This reflects the traditional operation of a scheme where the trustees set the investment strategy. We would expect that trustees in this situation would have the appropriate collective knowledge and experience and take appropriate professional advice.

Is it clear which roles subject to fitness and propriety are unique to multi-employer CDC schemes?
Is the description of the roles requiring a fitness and propriety check sufficient to identify them within a scheme’s governing structure?
Is the expected level of competence clear and appropriate for each role subject to a test of fitness and propriety?
Are there any potential conflicts of interest that could arise from trustees acting as chief investment officer in a multi-employer CDC scheme?

Scheme proprietor

The scheme proprietor is a newly created role for multi-employer CDC schemes. The role of the employer in single-employer CDC schemes is unchanged. If you were to consider the master trust authorisation regime, which many potential multi-employer CDC scheme applicants will be familiar with, the scheme proprietor combines elements of both the scheme funder and scheme strategist. There must be only one scheme proprietor that is separate from the trustees and is responsible for preparing the business plan. It also provides financial support to the scheme and must be able to demonstrate a commitment and ability to provide that support. The scheme proprietor also has a role in promoting and marketing the scheme. The proprietor may be an existing provider, another experienced organisation, or even a body created expressly for the purpose.

There is a substantial amount of disclosure required from the scheme proprietor both for authorisation and ongoing supervision. As the role they play is so significant in the success and sustainability of a multi-employer CDC scheme we expect the proprietor to be able to demonstrate their own willingness and ability to support the multi-employer CDC scheme over the long term.

Is the level of detail we have set out sufficient to understand the role and responsibilities of the scheme proprietor?
Are any of our expectations of the scheme proprietor likely to deter prospective new entrants?
Can you tell us more about prospective business models, for example how the scheme proprietor is likely to be used in practice?

Financial sustainability

The assessment of financial sustainability is largely unchanged in the draft code when compared to the expectations for single-employer CDC schemes in the current code. The significant new aspect is the requirement for a business plan to be submitted and assessed for authorisation. We have replicated the main features of the business plan from similar requirements in our authorisation of master trusts. It is our hope that the relative familiarity of this set of expectations will enable scheme proprietors and their advisers to more readily create and maintain their business plans.

The business plan needs to be a comprehensive document that sets out the objectives of the scheme. It ties closely with financial sustainability through the costs, assets and liquidity plan (CALP), and with the continuity strategy. We expect to see consistency between all these aspects of the scheme’s authorisation.

Are the expectations we have set out for the business plan appropriate for multi-employer CDC schemes?

The trustees of a single-employer CDC scheme are required to set out their strategy for meeting any shortfall between the scheme’s income and the scheme’s costs as part of the authorisation criteria. Our preferred method for doing this is by using a CALP. The CALP remains relevant for single-employer CDC schemes and has been carried through to multi-employer CDC schemes where the relevant provisions form part of the requirements for the business plan. When prepared for a multi-employer CDC scheme the specific items forming the CALP can be incorporated into the business plan.

Does treating the CALP as a separate element of the business plan remain reasonable for multi-employer CDC schemes?

Continuity strategy

The continuity strategy is the scheme’s approach for dealing with triggering events, which may affect the authorisation of the scheme. The requirements of the continuity strategy have changed for multi-employer CDC schemes, but remain substantially the same as before.

Perhaps the biggest changes occur in relation to our expectations around continuity option 3. This is where a scheme chooses to close and run on following a triggering event. There is a legislative change that means we must be sure that there is nothing in the scheme rules that prevents the trustees from choosing to use continuity option 3 after a triggering event. We believe that this is an important requirement as it enables the trustees to ensure that any upheaval to members can be lessened. Under such a run on arrangement, a scheme would continue to pay benefits, rather than seeking a transfer to another arrangement which may not be able to reproduce the same level of payment to members. For this reason continuity option 3 is an important consideration.

We have also used continuity option 3 as a measure of the commitment of the scheme to the market and its long-term ability to operate viably. We do not expect a scheme to reserve for continuity option 3, as that would result in disproportionately large reserves being needed. Instead, we ask when it is projected that the scheme will be able to successfully pursue continuity option 3. This will give us some measure of the scale that the scheme needs to achieve, and the time taken to get to this point. We will expect to see consistency in the projections used here, and in areas such as the business plan.

Is the level of detail we have set out sufficient for schemes to present coherent continuity strategies?
Is it appropriate to use continuity option 3 as an illustrative measure of a scheme’s ability to provide for its members in the long term?
Are there any risks in not expecting a CDC scheme to plan, or reserve, for continuity option 3 when it first comes for authorisation?

Sound scheme design

The trustees must set out a viability report, accompanied by a viability certificate, as evidence that the scheme has a sound design. There should be clear evidence provided that the trustees have taken appropriate advice from suitably qualified professionals, as well as modelling and testing in line with a scheme’s complexity. We will take a wide range of factors into account when considering whether a scheme’s design is sound. We will expect to receive detailed and comprehensive supporting information on the calculations and how the conclusions have been met.

Does the detail set out in the sound scheme design section provide enough information about the evidence that we would expect to see?

Promotion and marketing

Recognising that multi-employer CDC schemes are more likely to be run on a commercial basis, there are new expectations placed on them in relation to promotion and marketing of the scheme. The draft code sets out our expectations on promotion and marketing, when applying for authorisation and on an ongoing basis.

If we believe that elements of the code relating to promotion and marketing are not being complied with, we can use our powers to ensure schemes comply. Promotion and marketing is defined in the legislation as:

“any communication about the scheme for the purpose of inducing a prospective employer to use, or an employer to continue to use, the scheme (whether or not that communication is accompanied by an offer of, or provision of, a benefit) and “promote or market” is to be construed accordingly”.

When assessing compliance with this we will approach it in a reasonable matter, basing our opinion on what might be considered reasonable by an ordinary member of the public.

To ensure that any organisations who are carrying out promotion and marketing are operating within a familiar framework, we have based our expectations on those used by the Financial Conduct Authority in their financial promotions regime. Promotion and marketing can only be carried out by the scheme promoter, not the trustees. The promoter will be subject to fitness and propriety checks and cannot be the trustees. However, we want to ensure that the trustees maintain a strong oversight on the work that is being carried out on their behalf. We have engaged with some stakeholders on this point and believe that we have hit a reasonable balance on the accountability to the legislation, and that owed by the trustees. We are interested to hear views on this and whether any aspects of this will present problems to potential market entrants.

We are also conscious there may be people who promote or market the scheme who are not subject to fitness and propriety checks. These may be employers or salespeople who are not directly connected with the scheme or scheme proprietor. In most cases we expect they will use materials that have been produced by scheme. However, there may be accidental incentives to misrepresent the scheme in order to get direct or indirect financial benefit. This may result in the scheme being misrepresented through no direct fault of those accountable for promotion and marketing. We are interested to understand how schemes may seek to control this activity and how it can be identified and corrected.

Are the promotion and marketing expectations that we have set out sufficiently comprehensive for those seeking to set up and run a multi-employer CDC scheme?
Is the balance between the obligations of the promoter and those of the trustees sufficiently clear, and workable in practice?
Do you see any barriers in meeting our expectations for effectively using members’ feedback and communicating how benefits may potentially vary from target?
What controls are the promoter and trustee of a scheme likely to use to seek assurance that their scheme has not been misrepresented when being promoted or marketed?

Supervision

Once authorised we will continue to supervise a scheme to ensure that it continues to meet the standards expected. Our supervision process will develop over time as the market grows and our understanding of each market participant grows. There are, however, reporting requirements placed on schemes in the form of significant events and triggering events. The latter are serious incidents that may affect the authorisation of the scheme directly. Significant events are more routine happenings but may have an impact on the way that we view the scheme.

With the introduction of multi-employer CDC schemes there are new significant events and triggering events to be considered. We have set these out in a similar format to the legislation, and the way that such events are presented in the current code.

Is the level of supervision detail we have set out sufficient?

CDC schemes are different to those we are used to regulating. They share features of both DB and DC, but are unique and have their own risks. There is currently only one CDC scheme operating and that is very different from the multi-employer models that we are likely to see following the commencement of this code. TPR has moved towards a more prudential-style of regulation where it look at risks not just at an entity level, but at market level where this may impact schemes. We also recognise that schemes that are directly authorised by us may require a different style of regulation, and that is why we are changing our supervisory approach. In particular, the way we use our powers in and established market of CDC schemes may well have to change.

Can you share your thoughts on the ways that our approach to regulation of multi-employer CDC schemes may have to change over time.

Other issues

Do you have any other issues that you wish to raise in relation to this code, the approach we have taken, or the expectations that we have set out?