The Pensions Regulator (TPR) has today published a consultation on a new code of practice for the authorisation and supervision of collective defined contribution (CDC) pension schemes.
The final code will outline how trustees can apply for authorisation and how TPR will assess schemes against authorisation criteria at the initial application stage and throughout on-going supervision.
The draft code reflects regulations for CDC schemes published by the Department for Work and Pensions and laid before Parliament last month (December 2021).
David Fairs, TPR’s Executive Director of Regulatory Policy, said: “CDC schemes have the potential to change the pensions landscape by offering savers and employers a viable alternative to traditional defined benefit and defined contribution schemes.
“As a regulator we welcome innovation but we remain committed to protecting savers. We are confident our draft code sets the right bar for authorising and supervising CDC pension schemes that have demonstrated how they meet the criteria.
“The draft code focuses on requirements that employers and trustees considering establishing a CDC scheme need to plan for now. We will be revisiting the code to expand on our expectations for the closure or wind up of a scheme in due course. We will also be producing accompanying guidance.
“While initially CDC schemes will 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. We look forward to working with the DWP and industry on any development and expansion of CDC schemes.”
Trustees will be able to apply for authorisation to operate a CDC scheme from August this year.
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.
The eight-week consultation will run until Tuesday 22 March.
Ends
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 in close consultation with TPR. These expand on and provide specific detail to the provisions in the 2021 Act. They have been laid before Parliament but not yet made.
- 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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