The Pensions Regulator has published a draft code for collective defined contribution schemes that includes multi-employer schemes, as well as covering single employer CDC. The consultation closes on 13 February.  

Multi-employer CDC is set to be introduced next summer. The extended CDC code sets out the criteria for authorisation, TPR’s expectations of multi-employer CDC schemes, and how it will use its powers to support multi-employer CDC to market.  

The draft code sets out: 

TPR’s revised code is set to come in on the same day the regulations for multi-employer CDC, which are expected to come into force at the end of July 2026. The regulator anticipates it will be able to accept applications for authorisation from August, saying schemes could be operational in early 2027. 

“We’re determined to help turn a savings system into a pension system which provides a sustainable income through later life. CDC could play a role in this, and our consultation marks an exciting development in the journey to help make this innovation available to more people,” said chief executive Nausicaa Delfas. 

“It’s important that new models provide security and value, and we welcome views on our consultation to make sure that balance is right. I also invite trustees and corporates considering multi-employer CDC to speak with our innovations service as soon as they can, so they are well placed to apply to TPR for authorisation next summer,” she added. 

Pensions minister Torsten Bell said: “Collective defined contribution schemes are a hugely important tool for us improving the pensions landscape – giving savers, employers and providers more options as we seek to deliver better retirement. This consultation moves us closer to giving more workers access to lower risk, better outcome pensions, helping deliver a higher standard of living in retirement.” 

New expectations compared with the code for single employer CDC include there being a company or person that financially supports the scheme, the way the scheme is promoted or marketed, and the fitness and propriety of key personnel associated with the scheme. 

The regulator also sets out the requirements for notifying it of a significant event, which includes “changes to the character of the investment strategy”. These could range from the investment philosophy to target returns and benchmarks, permissible asset classes, the asset allocation and the risk budget. 

TPR said its eventual ambition is to align its codes for authorised schemes “as far as practical, and to incorporate them into our general code of practice”, which is why the draft code adopts the modular format of the general code. 

CDC is also due to be rolled out across the decumulation space. The regulator is currently working with the Department for Work and Pensions on retirement-only CDC schemes. 

The Pensions Management Institute’s chief strategy officer Helen Forrest Hall welcomed the consultation, saying the PMI has long supported the CDC model. 

 

“Giving savers access to a wider range of high-quality, value for money pension options is vital to delivering better outcomes. As the market evolves, it is essential that innovation is embraced,” said Forrest Hall. 

 

"Multi-employer CDC schemes – like all innovative solutions – must, however, be underpinned by robust governance, financial security and strong member communications,” she added.

The Society of Pension Professionals has also been positive about the new-look CDC code.

 

Deputy chair of the SPP’s CDC Committee, Iain McLellan, said TPR’s elves have been busy to meet their pre-Christmas deadline for the draft code, adding: "With the unconnected CDC regulations being finalised, this will be the final part of the jigsaw to allow these schemes to be authorised and launched in 2027.”

 

The principles and benefits of CDC are clear, but so are the trade-offs, argued Paul Waters, who heads up DC markets at consultancy Hymans Robertson.

“The draft code allows us to further develop the detailed design points needed for a successful CDC scheme. Business plans, continuity plans, governance processes and structures, investment strategy, communications and actuarial approaches,” he said.

“We are pleased to see this latest milestone reached on schedule, helping the industry remain on track for members to benefit from CDC in 2027. [Multi-employer] CDC schemes are the gateway for employers to be able to access CDC in a practical and affordable way, fundamental to its growth in the UK,” Waters added.

There is currently only one single employer CDC scheme in the UK, for the employees of Royal Mail, but it is anticipated that DC master trusts will look to offer multi-employer CDC. TPT Retirement Solutions has already announced its intention to do so.