The Pensions Regulator (TPR) has today laid its new code of practice for the authorisation and supervision of collective defined contribution (CDC) pension schemes before Parliament.
This key step will enable the code to complete its legislative passage in time for trustees to apply from 1 August for authorisation to operate a CDC scheme. The code is expected to be made after it has laid in Parliament for 40 days.
Guy Opperman, Minister for Pensions, said: “Collective defined contribution pension schemes have the potential to transform the UK pensions landscape and deliver better retirement outcomes for millions of pension savers.
“I therefore welcome the laying of TPR’s code before Parliament. We have seen the positive effect of CDC schemes in other countries and this code brings us one step closer to making them a reality here at home.”
The code sets out how trustees can apply for authorisation and how TPR will assess schemes against the statutory authorisation criteria at the initial application stage and throughout ongoing supervision.
The code reflects regulations for CDC schemes published by the Department for Work and Pensions (DWP) and made in March 2022.
David Fairs, TPR’s Executive Director of Regulatory Policy, said: “Laying our CDC code in parliament is a significant step as we prepare for a new type of scheme that paves the way for an alternative and innovative pension saving solution to traditional defined benefit and defined contribution arrangements.
“Our focus is on protecting savers, and while the code now clarifies a number of points raised during our consultation to explain how it reflects legislation, it continues to set the right bar for the authorisation and supervision of CDC schemes.
“We are confident the code clearly shows trustees how to meet the legislative requirements in their application and satisfy us they meet the authorisation criteria.”
TPR has also published its response to the CDC code consultation that ran for eight weeks earlier this year. During the consultation period 24 responses were received.
CDC schemes will initially be limited to those set up by single employers, or two or more connected employers. The Pension Schemes Act 2021 contains powers to enable further developments of the CDC market, such as multi-employer schemes. TPR will be working with the DWP to expand CDC schemes to a wider range of users.
The Pension Schemes Act 2021 introduced an authorisation and supervision regime to ensure only CDC schemes that are well run and built on sound foundations can operate and that TPR has powers to intervene when necessary.
Notes for editors
- The Pension Schemes Act 2021 (the 2021 Act) received Royal Assent in February 2021 and introduced the legislative framework for collective money purchase (also called collective defined contribution or CDC) schemes within the United Kingdom. The DWP has since developed the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 (SI 2022/255) in close consultation with TPR. These expand on and provide specific detail to the provisions in the 2021 Act. The regulations will come into force on 1 August 2022.
- This code is an addition to the existing legislation and codes that will be relevant to CDC schemes and TPR expects those who use this code to be familiar with their existing obligations and TPR’s expectations.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. Our statutory objectives are to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to 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).
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