The Pensions Regulator has set out a new code of practice for the authorisation and supervision of the government’s new Collective Defined Contribution (CDC) pension schemes.
The move is part of the preparation for the launch of CDCs which will allow occupational pensions to pool resources across several schemes to reduce costs.
The TPR says this “key step” will enable the code to complete its legislative passage through Parliament in time for trustees to apply from 1 August for authorisation to operate a CDC scheme.
The code is expected to be live after it has laid in Parliament for 40 days.
Pensions Minister Guy Opperman MP 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 statutory authorisation criteria at the initial application stage and during ongoing supervision.
The code is based on regulations for CDC schemes published by the Department for Work and Pensions (DWP) in March.
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, it says.
The TPR will have powers to intervene in CDCs when necessary.
