Applications for multi-employer CDC schemes are now open for multiple, unconnected employers, expanding access beyond the single-employer CDC framework introduced in 2021.
CDC schemes pool members' contributions and investments, allowing risks and rewards to be shared collectively. They provide a target retirement income for life, rather than relying solely on individual pension pots. Benefits can be adjusted up or down depending on investment performance and the scheme's funding position.
The new framework gives employers and members an alternative between traditional defined benefit (DB) and defined contribution (DC) pension arrangements.
Any organisation wishing to establish a CDC scheme must be authorised by The Pensions Regulator (TPR) before operating. Authorisation provides important protections for members and helps ensure high standards of governance and administration. TPR has today published new and updated guidance to help prospective schemes understand the authorisation process, regulatory requirements and what will be expected of them as authorised schemes.
This includes new guidance on promotion and marketing and sectionalisation of schemes, and updates to existing systems and processes and fees guidance.
Organisations considering establishing a CDC scheme are encouraged to engage early with TPR through its supervision teams and Innovation Support Service to support a smooth authorisation process and avoid surprises as new provision is developed: Get support with pensions innovation.
Richard Knox, Executive Director of Strategy, Policy & Analysis at The Pensions Regulator, said: "We are delighted to open applications for multi-employer CDC schemes, marking an important milestone in the development of the UK's pensions system. At The Pensions Regulator, we want everyone to be able to achieve a sustainable income in retirement, and multi-employer CDC schemes could become an important part of the pensions landscape to support this goal. We also want a no-surprises approach as new innovations like CDC come to market. That is why we encourage anyone considering establishing a scheme to engage with us early so we can support the process.”
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