The Pensions Regulator (TPR) today presented Parliament with its new code of practice for the licensing and monitoring of collective defined contribution (CDC) pension systems.
This will allow the code to achieve parliamentary passage in time for trustees to seek authorisation to manage a CDC scheme beginning August 1st. After it has been laid before Parliament for 40 days, the code is likely to be drafted.
The code outlines how trustees can seek for permission and how TPR will evaluate schemes against the statutory authorisation criteria both during the application process and during ongoing supervision.
The code is based on CDC scheme regulations published by the Department for Work and Pensions (DWP) in March 2022.
Pensions minister Guy Opperman 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.”
TPR executive director of regulatory policy David Fairs says: “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 released its response to the CDC code consultation, which took place earlier this year for eight weeks. A total of 24 replies were received during the consultation period.
CDC plans will be limited to those established by a single employer or two or more associated firms at first. The Pension Schemes Act of 2021 contains authorities that will allow the CDC market to develop further, such as multi-employer schemes. TPR will collaborate with the Department of Work and Pensions to make CDC programmes more accessible to a larger variety of people.
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