Consultation response on extending the collective defined contribution (CDC) code of practice
Read our response to feedback received on extending the CDC code of practice to multi-employer CDC schemes.
Published: 29 April 2026
Overview
This is the final response to our consultation on the revised CDC code of practice. The objective of the consultation on this code was to seek the views of those who would be using it. The consultation covered not only the content of the code, but also its style and overall flow.
The new code is designed first and foremost to be a digital product. We received positive feedback from those who engaged with the draft digital version of the code that was available on our website.
Consultation responses
We received 29 responses. A full list of respondents is available in the Appendix.
Thank you to everyone who responded to our consultation. This feedback has been critical to ensuring the final code is robust and fit for purpose, both now and in the future.
Background
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 members 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 it meets the relevant criteria. These include a requirement to have a scheme proprietor who is liable 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, as well as new authorisation criteria on the promotion and marketing of schemes.
Summary of feedback received and our responses
In this section, we set out the key themes raised in the consultation and our responses. Overall, our proposals were broadly welcomed, and therefore we have made only limited changes to the expectations set out in the code.
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?
You said:
Respondents universally supported the proposal to replace the existing CDC code with a single, consolidated code covering both single-employer and multi-employer CDC schemes. While they welcomed the streamlined approach, several emphasised the need to clarify areas where the rules differ between scheme types. A few respondents offered broader comments beyond the consultation’s scope.
Do you foresee any issues with this approach?
You said:
Responses to this question were limited, but those who did comment did not identify any major concerns with the proposed approach. The main point raised was the need for clarity on where expectations set in code differ between single-employer and multi employer CDC schemes, with some noting that the code could feel complex without clear signposting. One respondent also suggested that adding paragraph numbering would help improve navigation.
Do you consider that any important areas of the authorisation criteria require additional explanation or guidance?
You said:
This question generated a high volume of responses on a wide range of unrelated themes, making it difficult to identify a single clear action. However, some consistent areas of comment did emerge, including the need for clearer expectations on promotion and marketing, greater specificity around the responsibilities of the chief financial officer (CFO) role, and consideration of the distinct requirements of not-for-profit employers.
Are there any sections or paragraphs of the code that should be relocated to make them easier to use?
You said:
Only a small number of respondents answered this question, but among those who did, some highlighted duplication within the text and suggested ways to make navigation clearer.
Our response
We are pleased with the positive response to our proposed approach and welcome the constructive feedback provided. We recognise the importance of addressing the points raised and have sought to improve the clarity of content and signposting within the final version of the code. As part of this we have also added paragraph numbers to each module.
We have also listened to feedback about considerations of not-for-profit schemes. This feedback highlighted an accidental presumption that all new schemes would be established on a commercial basis. We have therefore made some minor amendments to make our expectations on not-for-profit schemes clearer.
Finally, we have updated the code to remove any unnecessary duplication. As the code will be published in separate modules, we don’t believe reordering is necessary, but we have brought some content together that was previously spread across several modules.
Questions on the introduction, authorisation and sectionalisation section
Is the explanation and level of detail we have set out in this section sufficient?
You said:
Most respondents felt the explanation and level of detail provided in this section were sufficient, although some respondents highlighted specific areas requiring clarification. Some questioned the treatment of situations where a master trust applies to add a CDC section. A few respondents considered the requirement to apply for authorisation of each individual section too burdensome.
Is it clear what constitutes a section and when you must divide a scheme into multiple sections?
You said:
Several respondents sought clearer guidance on when sectionalisation is required, particularly where this might affect past benefits. Some raised concern that elements of the code may go further than legislation requires. A number of comments urged us to take a pragmatic approach to assessing the readiness of IT systems, given the absence of real-world examples. Respondents also requested an explanation of materiality and thresholds for when separate sections must be created.
Is it clear how the authorisation fee will be set for schemes with multiple sections?
You said:
Several respondents raised questions about the level of fees for applications with multiple sections, indicating that while they accept the principle that fees should reflect the work involved, they would like greater clarity on how those fees are calculated and the criteria used.
Is it likely that existing schemes will set up a CDC section and do we need further consideration of such mixed benefit schemes?
You said:
Many respondents answered this question, with a substantial number expressing a desire for greater clarity on how master trusts offering mixed benefits would be treated if they were to establish a CDC section. There was broad agreement that additional, detailed guidance is needed in this area. Respondents also said that this guidance should be closely aligned with existing master trust guidance to ensure consistency and certainty for schemes considering this option.
Our response
We note that most of the feedback focused on sectionalisation of the scheme and understand the concerns raised. These concerns largely stemmed from a single paragraph which we have now rewritten to clarify the situation when it would apply.
Based on the feedback, we have identified several areas where further guidance would be helpful, and this will include fees and assessment of IT systems. We aim to publish any guidance before the summer.
Questions on the systems and processes section
Is the level of detail we have set out sufficient for schemes to meet our expectations for systems and processes?
You said:
Respondents generally felt the level of detail on systems and processes was appropriate, but others emphasised the need to keep compliance as simple and cost effective as possible.
Are there any industry standards or other approaches that could be used to satisfy us that a scheme is meeting our expectations?
You said:
A range of views were offered on industry standards and alternative approaches that could help demonstrate a scheme is meeting expectations. Several respondents suggested various existing quality marks and assurance standards that could be used. One respondent suggested that authorisation should only be granted once systems are fully built and tested.
Our response
We are pleased that the level of detail in the code is sufficient for schemes to be able to meet our expectations, and we have clarified some wording to help. We recognise the value of providing additional guidance and plan to publish it. Where appropriate, we will cross-refer to the existing industry standards suggested. We remain mindful of the importance of keeping the cost of compliance to a level that achieves our objectives without deterring new entrants. Where alignment with master trusts authorisation is possible, we will look to reduce any duplication of effort.
Questions on the fitness and propriety section
Is it clear which roles subject to fitness and propriety are unique to multi-employer CDC schemes?
You said:
Respondents generally felt that the roles subject to fitness and propriety requirements in multi-employer CDC schemes are clear. Several asked for additional clarification on which individuals must be assessed and more explicit labelling of roles that apply only to multi-employer CDC schemes. Some also sought clarity on the CFO’s role in unincorporated multi-employer schemes and how it should be distinguished from trustees or the scheme proprietor. Finally, one respondent sought assurance that those involved in electing trustees were exempt from assessments.
Is the description of the roles requiring a fitness and propriety check sufficient to identify them within a scheme’s governing structure?
You said:
Several respondents indicated that further clarification would be beneficial to ensure consistent identification of in-scope individuals across differing scheme structures. In particular, views were expressed that some responsibilities may operate as a team-based function.
Additional clarification was also sought regarding the role and responsibilities of the scheme proprietor, as well as clearer guidance on the processes for appointing and removing trustees.
Some stakeholders requested that arm’s-length investors be excluded from the fitness and propriety requirements, noting their lack of involvement in decision making. Respondents further noted that narrowing the definition of those with ‘significant involvement’ in decision making could help ensure that checks are applied proportionately.
Is the expected level of competence clear and appropriate for each role subject to a test of fitness and propriety?
You said:
Respondents provided a wide range of feedback. Several noted that competence should not be defined primarily through experience in a regulated sector. Instead, a greater emphasis should be placed on an individual’s underlying abilities, qualifications, and capacity to discharge their responsibilities effectively. Questions were also raised about who may act as chief investment officer (CIO).
Multiple respondents sought clarification on whether ‘a person’ must be an individual or whether corporate entities or groups of professionals could satisfy the requirement. It was also suggested that a high-level articulation of expectations would be more appropriate at this stage, with detailed evidence regarding competence to be provided later.
Are there any potential conflicts of interest that could arise from trustees acting as chief investment officer in a multi-employer CDC scheme?
You said:
Respondents generally agreed that there is potential for conflicts of interest to arise where trustees act as CIO in a multi-employer CDC scheme. A minority, however, considered conflicts to be inherent in situations where trustees are also responsible for designing and implementing investment strategy. They emphasised the need for careful identification, management, and clear documentation of such conflicts.
Overall, respondents tended to view the issue more as a practical governance challenge than an unmanageable conflict.
Our response
We recognise that some responses focused on specific roles needing more clarification on the competencies required. We have adjusted our expectations for relevant experience to be in a regulated environment. We accept the arguments made in several responses that this may prove overly restrictive. We have also clarified that we would not normally expect trustees to carry out the role of CIO. There are some areas where suggestions were made, particularly in relation to not-for-profit schemes, where further clarity has been provided in the final code.
We have not made any significant adjustments to our explanation of who we may assess in relation to the fitness and propriety of the scheme proprietor. We accept many of the arguments put forward, but we do not believe that a blanket approach would be appropriate. We will instead consider each scheme proprietor on a case-by-case basis.
Questions on the scheme proprietor section
Is the level of detail we have set out sufficient to understand the role and responsibilities of the scheme proprietor?
You said:
Most respondents felt that the level of detail provided was sufficient to understand the role and responsibilities of the scheme proprietor. However, several sought further clarification on specific aspects.
Some respondents requested greater clarity on when a scheme proprietor would be required to produce accounts, particularly where it had been established solely for the purposes of the scheme.
Questions were also raised about whether a company wholly owned by the trustees could act as scheme proprietor.
Additionally, respondents sought clarification on the relationship between the scheme proprietor in a CDC scheme and the scheme funder and scheme strategist in a master trust.
Are any of our expectations of the scheme proprietor likely to deter prospective new entrants?
You said:
Most respondents considered the expectations placed on the scheme proprietor to be reasonable and did not view them as a significant deterrent to prospective new entrants.
Overall, while the framework was broadly supported, respondents indicated that targeted clarification about certain corporate structures and additional flexibilities for not-for-profit organisations could help reduce perceived barriers.
Can you tell us more about prospective business models, for example how the scheme proprietor is likely to be used in practice?
You said:
Respondents anticipated that a range of business models could emerge as the CDC market develops and encouraged further engagement and discussion to support this. Some expressed concern that the current flexibility given to the scheme proprietor role may not be sufficient to accommodate existing structures, particularly in industry wide models. Others indicated that further clarity and ongoing dialogue will be important to ensure it remains workable across different organisational structures.
A few respondents had questions on specific aspects of the role or who could be the proprietor, particularly where not-for-profit organisations are proposing to create structures that meet the requirements of the legislation. A question was also asked about how trustee accounts should be prepared when no history exists yet. We have clarified the code in relation to this requirement and the expectations for the role of scheme proprietor.
Our response
We are pleased that the responses indicate our level of detail is sufficient for understanding the role of scheme proprietor.
We recognise the points made about the need to allow for not-for-profit schemes but note they are likely to be more closely engaged with throughout the authorisation and monitoring process. While we accept there are some concerns about the nature of the scheme proprietor role, we welcome the views of the overwhelming majority of respondents’ that this would not unduly discourage new entrants.
Questions on the financial sustainability section
Are the expectations we have set out for the business plan appropriate for multi-employer CDC schemes?
You said:
Most respondents felt the expectations for the business plan were broadly appropriate but highlighted areas where further clarity would be helpful. In particular, respondents asked how some requirements should apply when a scheme is newly established with no members or employers.
Clarification was sought on the wording and purpose of reserves, and on how they should be held and maintained under different scheme models. Others questioned the need for continuous monitoring of reserves, suggesting monitoring only at relevant transactions
Does treating the CALP as a separate element of the business plan remain reasonable for multi-employer CDC schemes?
You said:
Respondents agreed the approach is sensible.
Our response
While these questions generated much comment, we were pleased to recognise that respondents generally agreed that our approach is appropriate and reasonable. While we have not made any significant concessions or changes in this area, we have clarified the wording around our expectations and accommodating potential models.
We have also sought to provide more options for the ways in which reserves can be held. We have not, however, made any relaxation in our expectations about the amounts that should be reserved to deal with possible triggering events.
Questions on the continuity strategy section
Is the level of detail we have set out sufficient for schemes to present coherent continuity strategies?
You said:
Most respondents felt the level of detail was generally helpful, but some requests were made for additional detail on member detriment and the implications for retirement-only CDC models.
The importance of member communications was highlighted, alongside recognition of the cost challenges associated with continuity option 2. Further requests included clarity on our preferred method of securing benefits on wind up, how to calculate realisable value for members, and whether we expect any minimum threshold below which a scheme should trigger windup.
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?
You said:
Several respondents noted that continuity option 3 is only realistically viable for schemes above a certain size. Some challenged the assumption that continuity option 1 would necessarily lead to a significant loss of retirement income.
One respondent queried our expectations around the timescales for continuity option 3. A number of respondents emphasised the need for flexibility for schemes to act according to their circumstances, rather than being benchmarked against a single illustrative option.
Are there any risks in not expecting a CDC scheme to plan, or reserve, for continuity option 3 when it first comes for authorisation?
You said:
Most respondents acknowledged that there are potential risks in not expecting schemes to plan or reserve for continuity option 3 at authorisation. However, several emphasised that any such planning should be proportionate and adaptable over time as the viability of continuity option 3 changes. Some highlighted that continuity option 3 planning interacts with intergenerational cross-subsidies, suggesting that early assumptions may create unintended distributional effects as the scheme evolves.
Others raised questions about how reserves would be built up, including who would bear the associated costs and whether this would place an undue burden on early members or employers. Conversely, one respondent felt there was no need to require continuity option 3 planning at such an early stage, arguing that the risk is low during initial establishment and that reserving requirements could be reconsidered as the scheme matures.
Our response
We are pleased that most respondents agreed in general terms with our approach on the continuity strategy. Most respondents recognised our wish to use it as an indicator of the sustainability of a scheme. We also recognise that the costs of running a closed, mature CDC scheme would be significant, which is why we have never intended that this eventuality should be reserved for at the outset. However, we recognise the need for clarity and a few changes have been made to the code as a result.
It is clear that some respondents are thinking towards retirement-only CDC, which the Government has indicated it will consult on in the near future. This code makes no provision for retirement-only CDC and when government takes measures to introduce it, we will adjust the code accordingly.
Questions on the sound scheme design section
Does the detail set out in the sound scheme design section provide enough information about the evidence that we would expect to see?
You said:
Most respondents felt that the detail provided in the sound scheme design section was broadly sufficient, though several suggested refinements to strengthen clarity and alignment with industry practice. A few respondents proposed minor footnote corrections and recommended that the scheme proprietor engage appropriate advisers to support scheme design. Multiple respondents highlighted the need for clear alignment with Financial Reporting Council (FRC) requirements, particularly around actuarial equivalence. Requests were also made for the inclusion of sensitivity analyses, and for greater clarity on the actuarial models we would expect to be used within a viability report.
Our response
We are pleased that this section was widely accepted by respondents. Several referred to the consultation that was opened by the FRC on technical standards as this consultation came to a close. While there had not been much time to consider the interaction of our code and the proposed new standards, no one raised any concerns. We had indicated that any significant concerns could be raised after our consultation had closed and none have been.
Questions on the promotion and marketing section
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?
You said:
Most respondents were broadly supportive of our framework and felt that the promotion and marketing expectations were generally comprehensive, though several raised concerns about proportionality and practicality. Some noted that multi-employer CDC schemes will inevitably need to undertake promotion and marketing activities and felt the proposed approach may be overly prescriptive. Respondents emphasised the importance of balancing regulatory caution with the benefits to members. They also highlighted uncertainty around the definition of an ‘inducement’, including whether it applies across all communication channels.
A number of respondents expressed concerns about the resource implications of the sign-off requirements and warned that the current approach could limit the member experience, even though they recognised the need to manage risk.
Several noted the subjective nature of distinguishing factual information from promotional information and requested examples of permitted and prohibited activities, along with clarity on who was ultimately responsible for marketing and promotional activities.
Is the balance between the obligations of the promoter and those of the trustees sufficiently clear, and workable in practice?
You said:
Responses to this question were mixed, with some agreeing that the balance of obligations between the promoter and trustees is clear, while others felt it requires further clarification. Several respondents emphasised the need to clearly define the relationship between those carrying out promotion and marketing activities and the trustees. They noted that it is the scheme proprietor’s role to engage and oversee promotional activity, while the trustees’ responsibility is to ensure the scheme is run in accordance with its rules.
Concerns were raised about the practicality and potential conflict of trustees being required to review or oversee marketing materials while being prohibited from undertaking marketing themselves. Respondents requested additional guidance to clarify how these respective responsibilities should operate in practice and to ensure that roles are workable and aligned with legislative intent.
Do you see any barriers in meeting our expectations for effectively using members’ feedback and communicating how benefits may potentially vary from target?
You said:
Most respondents identified several practical barriers to meeting the expectations. As with earlier questions, respondents noted the need for clearer distinction between factual communication and promotion and marketing. They also asked for clarity on who the audience is and whether communications are intended primarily for employers, employees, or both. Some questioned the value of collecting and reporting on employer feedback, suggesting it may be of limited utility. A number of respondents highlighted that member unfamiliarity with CDC concepts could make communications challenging, raising the question of whether necessary explanations might be treated as promotional activity. Several felt the expectations around gathering and considering member feedback were overly onerous, and that a more targeted, periodic approach would be more proportionate. Some also questioned the value of a formal member feedback report. Respondents emphasised that the complexity of explaining benefit variability requires essential but potentially difficult communications. They suggested that testing member understanding of key concepts may help ensure clarity and effectiveness.
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?
You said:
Respondents identified a range of controls that promoters and trustees are likely to use to gain assurance that schemes are not misrepresented during promotion or marketing. These included regular reporting on the visibility and use of marketing materials, alongside strong governance processes to ensure accuracy and consistency.
Several respondents reiterated the need to clarify responsibilities for promotion and marketing, noting that the risk of mis selling is heightened where employers do not fully understand CDC. Suggestions included independent testing of materials to assess comprehension, obtaining member feedback in a proportionate and non-burdensome way, and seeking validation from the scheme actuary – particularly for materials referencing projected or quoted rates.
Respondents also highlighted the role of technical experts in verifying content, as well as implementing controls around sales reward structures to avoid inappropriate incentives. Many respondents observed that trustees and promoters would routinely seek legal advice to ensure compliance. Some questioned whether there would be penalties for misrepresentation and requested clarity on the enforcement approach.
Our response
We have taken on board the feedback received and acknowledge that there is some nervousness about trustees going further than just providing factual information about the scheme. This is a new area of regulation for us, and for occupational pension schemes. We are committed to a pragmatic regulatory approach which will be informed by and evolve with developments in the market. We will also publish some standalone guidance later this year which will look at addressing some of the concerns raised. We will keep this guidance under review as the market, and our experience of it, develops.
There are a few areas where we have tightened up some of the wording in the code to make it easier to understand. For example, we have expanded the definition of an inducement, so it captures all pension schemes to future proof it as much as possible. We have also tightened up the wording from the Financial Conduct Authority (FCA) test on whether an item is defined as a promotion, which several respondents asked for clarification on.
We also note that several respondents asked for clarity around the respective responsibilities of trustees and scheme proprietors when it comes to promotion or marketing. As the trustees are prohibited from undertaking any of these activities, the responsibility would sit with the scheme proprietor and/or any other person they have delegated this responsibility to. Trustees have an important role in challenging key promotional materials if they believe they are unclear or misleading, or both. On the rare occasion trustees may not have identified issues, we do reserve the right to also take action against them.
Finally, some respondents questioned the use of the wording ‘member detriment’ as marketing and promotion is only aimed at employers. Whilst this is true, schemes should recognise that ultimately any misrepresentation of scheme benefits will impact the member. Trustees have a fiduciary duty to act in the best interests of members, and we believe therefore the wording is correct and will remain as is.
Questions on the supervision section
Is the level of supervision detail we have set out sufficient?
You said:
Most respondents agreed that the proposed level of supervision detail is broadly appropriate, but several areas were identified where further clarification would be beneficial. In particular, respondents asked for more detail on when promotion and marketing activities begin and how these will be supervised, as well as a correction to relevant footnotes.
Questions were raised about whether supervision should focus primarily on the scheme proprietor or the trustees. Respondents drew parallels with master trust supervision, noting that expectations are likely to evolve over time and should reflect transitional growth phases.
Some respondents also felt that the definition of significant events was too broad and that the reporting timelines may be too short.
Can you share your thoughts on the ways that our approach to regulation of multi-employer CDC schemes may have to change over time?
You said:
Most respondents felt that the regulatory approach for multi-employer CDC schemes will need to evolve over time, largely depending on how the market develops. Several suggested that regulation should become more efficient and targeted as experience builds, allowing supervisory focus to shift in line with emerging risks. Some anticipated that a period of closer, one-to-one supervision may be necessary initially, until both we and the market gain a clearer understanding of operational dynamics.
Our response
We feel it’s important to address the concerns raised about marketing of the scheme prior to authorisation, where providers want to gauge interest and commitment from employers looking to join the scheme. We would have significant concerns if any promotion and marketing conducted before the scheme is authorised is misleading and as such, we would likely take this into account when considering the authorisation of the scheme. With this in mind, we urge anyone looking to set up a scheme to familiarise themselves with the requirements for marketing and promotion to avoid any issues at the authorisation stage.
Questions asked about other issues respondents wanted to raise
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?
You said:
Respondents raised a range of additional issues for consideration. Several noted the need to correct footnote errors and requested further guidance, particularly in relation to sectionalisation, where authorising separate sections on an individual basis could become cumbersome.
Many of the other comments received were looking towards the future and addressed both market and policy concerns. Others in this section took the opportunity to reiterate points made earlier in the consultation.
Our response
The main issues people were keen to raise were the correction of legislative footnotes, clarification on sectionalisation and the desire for additional guidance across various sections. There were also a couple of requests for further clarification on not-for-profit schemes. One response wanted better signposting between requirements for multi-employer and single-employer CDC schemes.
We are pleased to see that most respondents recognised that the CDC market will grow over the coming years and that our approach to authorisation and supervision will need to change accordingly. This matches our own intended approach which will adjust to meet the specific challenges that we see within the market over time.
Many of the responses to this question were around matters not for inclusion in the code at this time. We will be sure to note them, however, and take them into account as the CDC market and legislation develops.
Appendix: List of respondents
Association of British Insurers (ABI)
Association of Consulting Actuaries (ACA)
Aon
Association of Pension Lawyers (APL)
Association of Professional Pension Trustees (APPT)
Aptia
Barnett Waddingham
Burges Salmon
CDC Forum
Church of England
CMS
Gallagher Benefit Services
Goddard Perry
Gowling WLG
Hymans
Institute and Faculty of Actuaries (IFoA)
Isio
LCP
Mercer
PASA
Railpen
Sackers
Smart
The Society of Pension Professionals (SPP)
The Pensions Trust (TPT)
Unite the union
Vidett
WTW
Zedra