New TPR code for CDC schemes
Ref: PN26-10
The Pensions Regulator (TPR) code of practice for collective defined contribution (CDC) schemes, which has been expanded to cover multi-employer schemes, has been laid in Parliament today.
CDC schemes are a new type of collective pension. TPR is already in discussion with several possible market entrants ahead of the code coming into force.
Following its recent consultation on an updated CDC code of practice, the code has today been laid in Parliament and is expected to come into force in mid-October. Multi-employer schemes could be operating in early 2027.
The new regulations and revised code will allow providers to offer their scheme to multiple unconnected employers. They will need to apply to TPR for authorisation before taking on business.
The revised code sets out TPR’s expectations of CDC schemes, the criteria for their authorisation, and how TPR will use its powers in this market.
TPR’s Executive Director of Strategy, Policy and Analysis, Richard Knox, said: “Our goal is to help transform a savings system into a pension model that offers people reliable, sustainable income throughout retirement.
“CDC schemes can help to deliver that future. We are already in discussions with several potential entrants to this market. I encourage others considering offering a CDC service to speak with our innovation service.”
TPR is also publishing its response to the 29 responses it received to its consultation on the code.
Notes for editors
- CDC schemes provide an innovative alternative to traditional defined benefit (DB) and defined contribution (DC) pension schemes. In CDC schemes, member and employer contributions are pooled in a collective fund which provides a target income for life without guaranteed payout levels, allowing adjustment based on investment performance. The pooling of longevity and investment risks makes CDC schemes more resilient to market shocks. Unlike DB schemes, the pension benefits are not guaranteed in CDC schemes, so they provide employers with predictable costs. External modelling suggests that they can also provide, on average, better returns for members than traditional DC schemes.
- The Pension Schemes Act 2021 introduced an authorisation and supervision regime for CDC schemes. They must show they meet stringent criteria including that those who run the scheme meet fitness and propriety requirements, have the right systems and processes in place, can show the scheme is financially sustainable and produce robust member communications. TPR has powers to intervene where appropriate, when necessary. Currently, CDC schemes can be set up by single employers, for that employer only, or for employers in the same group of companies.
- You can find out more about our innovation support service.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. Its mission is to protect savers’ money, help to enhance the pensions system, and support innovation in the interests of savers. Its statutory objectives are to:
- protect members’ benefits
- reduce the risk of calls on the Pension Protection Fund
- promote, and improve understanding of, the good administration of work-based pension schemes
- maximise employer compliance with automatic enrolment duties
- minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)
Press contacts
- Out of hours
- This is for journalists only with a media enquiry. The below number will divert to our on call media officer.
- pressoffice@tpr.gov.uk
- 01273 648496
