Background

On 19 December 2025, TPR published a consultation on a revised draft code of practice for CDC schemes. It is designed to replace the existing code applicable to single and connected employer CDC schemes in order to cater for unconnected multi-employer CDC schemes (referred to in this response as “multi-employer CDC schemes”).

In this response

General comments

  • Overriding trustee duties

 As we noted in our November 2024 response to the DWP’s consultation on legislation to introduce multi-employer CDC schemes, the framework needs to be consistent with the overriding duties of trustees, including to act impartially between members and to treat members fairly.

Trustees must apply trust law principles when making decisions, and, given difficult questions could arise around fairness and intergenerational matters in CDC schemes, this is particularly relevant for multi-employer CDC schemes. For example, trustees will need to consider their trustee duties when making any decisions, including when:

  • considering how much flexibility to allow within the same section of a scheme, and
  • making any decisions about offering different accrual rates.

Given the above, we believe the code should explicitly reference the importance of trustee duties, as it is not always possible to answer a question or make a decision simply by checking what statute or regulatory materials provide.

  • General code of practice and interplay with other policy initiatives

We note TPR’s eventual ambition to incorporate the code into the general code of practice and we support TPR’s aims of removing unnecessary duplication and making the codes easier for users to navigate. Given that the code will need to be adapted to cater for retirement CDC schemes, we would welcome any insight as to how TPR will adapt the code for these schemes, and how this will fit in with its plans to move the code to the general code of practice.

We acknowledge the ongoing work by TPR, the DWP and the FCA in relation to the many parallel developments in the pensions space, including guided retirement for trust-based schemes, the value for money framework, and the FCA’s framework for “targeted support”. It will become increasingly important to highlight the interplay between different aspects of TPR’s expectations as the new policy environment develops, so it would be useful if this code could include cross-references to other relevant modules and codes where possible.

  • Further legislation and guidance

As some areas of the legislation require expansion, we understand that TPR is not able to fully address its expectations in the draft code. We also note that additional guidance may be published. We appreciate the timing of the legislation is outside of TPR’s control, and would welcome further guidance. However, not seeing the full package makes it difficult to comment fully on the draft code. It would be helpful to flag where: (a) further detail is expected to be added to the code following legislation and (b) guidance will expand on the code.

  • Roles and responsibilities

Further clarification of roles, particularly who is responsible for complying with each requirement, would greatly assist providers and trustees. For example, in the section Promotion and marketing: Introduction – Non-real time, it would be useful to clarify who needs to seek approval for the relevant types of promotion or marketing material. In our view, using the active voice where possible may help with this.

  • Legislative requirements

We acknowledge that TPR wants to avoid duplication and that trustees will need to look beyond this code to understand their legal obligations fully. The statutory references are really helpful in this respect.

In some places the code refers to requirements in legislation (eg in the section Scheme proprietor: Overview) but in other places the statutory requirements are set out in full. It would help users to clarify when the code is setting out a statutory requirement and when it is building on a statutory requirement. In our view, it would be helpful to set out the relevant statutory requirements as completely as possible rather than directing users to the legislation, to mitigate the risk of users misunderstanding their obligations.

Please see our response to question 30 for more detailed comments on the statutory references.

Responses to specific consultation questions

General questions

Question 1: Do you agree with our approach to replacing the existing CDC code with a code that covers both single-employer and multi-employer schemes?”

Question 2: “Do you foresee any issues with this approach?”

Yes, we are supportive of TPR’s approach of replacing the existing CDC code with one new code that covers both types of CDC schemes. Generally, it is clear throughout the code which requirements and expectations apply to multi-employer CDC schemes only. However, in some cases, some further clarity would be useful, for example:

  • CALP

Our understanding is that for multi-employer CDC schemes, the CALP is to be produced by the scheme proprietor as part of the business plan and approved by the trustees (see Financial sustainability: Costs, assets and liquidity plan (CALP)). However, in the section on mixed benefits under Financial sustainability: Financial resources, the code refers to trustees taking legal advice “when preparing their CALP”. Similarly, the section on Financial sustainability: Financial reserves and haircuts also refers to trustees rather than the scheme proprietor. Should these sections be referring to the scheme proprietor instead?

  • Continuity plan

For multi-employer CDC schemes, the scheme proprietor is responsible for preparing the continuity plan, with the approval of the trustees. The continuity strategy section often refers to the trustees (probably on the grounds that the trustees prepare it for single employer CDC schemes). It would be helpful if this section could be updated to clarify what is required of trustees and what falls on the scheme proprietor in respect of multi-employer CDC schemes.

Question 3: “Do you consider that any important areas of the authorisation criteria require additional explanation or guidance?”

 Yes, please see:

  • our general comments above
  • our response to question 6 below regarding sectionalisation
  • our response to question 8 below regarding mixed benefit schemes, and
  • our response to question 12 below regarding fitness and propriety.

Section-specific questions

Introduction, applying for authorisation, authorisation criteria and sectionalisation

Question 6: “Is it clear what constitutes a section and when you must divide a scheme into multiple sections?”

 We appreciate that TPR wants to ensure that it doesn’t inadvertently stifle market creativity by going into too much detail. However, to support all interested parties, we feel this section could be expanded to help illustrate when TPR would expect a scheme to create a new section. Furthermore, in the absence of detail, providers may restrict their offering to a simple benefit structure and avoid multiple sections, particularly since those additional sections are likely to carry extra authorisation fees.

We feel trustees would benefit from further guidance including:

  • TPR’s interpretation of “materially different” rates / amounts / adjustments to benefits for the purposes of regulation 27 of the 2025 Regulations
  • what the trustees should take into account when considering this point, and
  • some examples as to what level of differences could be permitted within the same section.

This would also help trustees to meet their overriding duties, including to act impartially between members and treating members fairly, in relation to sectionalisation (see our general comments above). In addition, we expect this further guidance would be helpful for those designing the administration of CDC schemes, for example by clarifying what information they will be expected to provide to assist trustees when making such decisions.

On a related point, it would be helpful to clarify what advice trustees should take when considering what changes to investment strategy would result in “materially different” rates (and so on), as, while regulation 33 of the 2025 Regulations requires actuarial advice in relation to the viability report and advice before preparing an investment strategy in connection with a viability report, it doesn’t seem to extend to this particular point.

 Question 7: “Is it clear how the authorisation fee will be set for schemes with multiple sections?”

 The fee process is generally clear but we would welcome further guidance on whether the fee for each additional section could change during the authorisation process – eg would TPR increase the fee if the additional work and complexity in evaluating the additional section was underestimated in the “upfront assessment”?

 Question 8: “Is it likely that existing schemes will set up a CDC section and do we need further consideration of such mixed benefit schemes?”

 Our understanding from the market is that, especially initially, multi-employer CDC schemes are most likely to be set up by master trust providers, as a new section within their master trust.

While each CDC and master trust arrangement within a scheme will need to comply with the respective authorisation and supervision requirements, it would be helpful to understand how TPR sees the master trust and CDC authorisation and supervision regimes working together in practice. For example, will TPR seek to avoid duplication in the authorisation and supervision process, such as where a person has already demonstrated fitness and propriety under one regime?

The guidance in the “Mixed benefit schemes” sections in Financial sustainability: Financial resources and Financial sustainability: Business plan (multi-employer CDC schemes only) around the scheme proprietor and funding is helpful. However, we expect providers and trustees will need more guidance and support from TPR on running a mixed benefit scheme in practice, including navigating the differences between the CDC and master trust regimes, and TPR’s expectations around unallocated assets, winding up requirements, segregation and cross subsidies.

 Fitness and propriety

Question 11: “Is it clear which roles subject to fitness and propriety are unique to multi-employer CDC schemes?”

 Yes, the layout of the page and the “In addition, for multi-employer CDC schemes only:” text makes clear that (e), (f), (g) and (h) in the list apply to multi-employer CDC schemes.

Question 12: “Is the description of the roles requiring a fitness and propriety check sufficient to identify them within a scheme’s governing structure?”

 Trustees

Under “Trustees” in Fitness and propriety: Who will we assess, the description of the people who need to be identified includes “all individuals who perform management or executive roles or make decisions on behalf of a trustee director that is itself a corporate body”. This appears to be a very broad description and could apply to a wider group of people than intended. For example, in the case of a professional trustee company appointed as a corporate trustee director, there may be a group of individuals supporting those responsible for the key functions and decision-making who could be caught unintentionally by this description.

We suggest amending this to more closely reflect the equivalent point in TPR’s master trust code, ie “individuals who perform management or executive roles and make decisions on behalf of a trustee director…” (our emphasis). The relevant section of the master trust code states:

“A trustee board may be comprised of one or more of the following: … If any trustee directors are themselves a corporate body, the individual who is performing the core functions and decision-making on behalf of the trustee director will need to be identified. If two or more individuals exercise core trustee director functions on behalf of a corporate trustee director, they will all need to be identified.”[1]

Scheme proprietor

Although we understand TPR’s approach of not duplicating what is set out in legislation, we think there is a risk that the user of Fitness and propriety: Who will we assess does not appreciate that there is a full definition of scheme proprietor in section 14B of the PSA21 (see our response to question 15 below and our response to question 30 on statutory references more generally).

We suggest that the Fitness and propriety: Who we will assess section is expanded to cross-reference the Scheme proprietor: Overview section.

Chief investment officer

As with the scheme proprietor section, we suggest making clear the full extent of the statutory definition (as set out in section 49(1) of the PSA21) in the Fitness and propriety: Who will we assess section.

The draft code refers to influence “and control” over the scheme’s investment strategy, which is narrower than the definition of chief investment officer given in the legislation, which uses the term “significant influence”. It would be helpful to clarify who TPR intends to be in scope and what the addition of “and control” is aimed at. See also our response to question 14 below regarding trustees and this role.

Question 14: “Are there any potential conflicts of interest that could arise from trustees acting as chief investment officer in a multi-employer CDC scheme?”

Looking at the statutory definition as well as the draft code, our view is that the role of “chief investment officer” could be the trustees (or an investment sub-committee of the trustees), as they are ultimately responsible for deciding how a trust-based pension scheme’s assets are invested (section 34 of the Pensions Act 1995), subject to obtaining and considering proper advice (section 36(3) of the Pensions Act 1995) and other trust law duties. As such, we wouldn’t expect there to be a conflict of interest, as this is part of the trustee’s role. Please could TPR clarify whether it is also envisaging that this role could be held by the trustees and expand the code accordingly?

Scheme proprietor

Question 15: “Is the level of detail we have set out sufficient to understand the role and responsibilities of the scheme proprietor?”

The description given in the Scheme proprietor: Overview section is a clear explanation of the requirements set out in section 14B of the PSA21. The reference to that legislation in the first paragraph of the section may be better placed as a footnote since it could give a misleading impression that there are further requirements in that section of legislation which are not covered in the code. Please see our response to question 30 for more general comments on footnotes.

Financial sustainability

Question 18: “Are the expectations set out for the business plan appropriate for multi-employer CDC schemes?”

We feel trustees would benefit from further guidance in respect of their role in approving the business plan (see our November 2024 response), including:

  • the possible consequences for trustees and the scheme if there is something in the business plan that turns out to be wrong
  • what level of detail would trustees be required to check (eg on the key financial information) before giving their approval
  • the extent to which trustees need to “look behind” any information given to them by the scheme proprietor
  • what sort of “commentary” might be expected in response to any revised business plan, and
  • what the consequences might be if trustees do not approve the business plan (or more likely, do not approve any revisions to the plan)?

Scope of statement

We would welcome clarification of the intended scope of the statement from the trustees, as the draft code appears to place further duties on the trustees than the legislation requires. The legislative requirement is for the business plan to include:

“A statement, signed by the trustees and the scheme proprietor, confirming –

    1. that the scheme proprietor considers the business plan to give a true and fair representation of the matters to which it relates, and
    2. that the business plan has been approved by the trustees” (our emphasis)

(paragraph 5, Schedule 1B of the PSA21, as amended by the 2025 Regulations).

In contrast, the draft code states:

“The business plan must be approved in writing by the scheme proprietor and the trustees. There must also be a statement signed by the scheme proprietor and trustees confirming that they consider that the business plan gives a true and fair representation of the matters to which it relates” (our emphasis).

The draft code suggests that the trustees “must” sign a statement confirming that they (ie the trustees) consider that the business plan gives a “true and fair representation of the matters to which it relates”, whereas, under the legislation, it is only the scheme proprietor who must consider confirm this point.

Our concern is that it would not be appropriate for trustees to make such a confirmation as they would not have relevant knowledge. Is this extension of the trustee’s confirmation intentional? If so, it would be helpful if TPR could set out its expectations in order for trustees to give this confirmation, recognising that they may not be in a position to verify information provided by the scheme proprietor.

Question 19: “Does treating the CALP as a separate element of the business plan remain reasonable for multi-employer CDC schemes?”

Please see our response to question 1 above.

Continuity strategy

Question 20: “Is the level of detail set out sufficient for schemes to present coherent continuity strategies?”

The Continuity strategy: Overview section doesn’t expressly state that for a multi-employer CDC scheme, trustee approval of the continuity strategy is required (section 17(6B) of the PSA21). We think it would be helpful to include this in the code.

Please also see our response to question 1 above.

Question 22: “Are there any risks in not expecting a CDC scheme to plan, or reserve, for continuity option 3 when it first comes for authorisation?”

The clear risks are the increased likelihood of CDC schemes winding up under continuity option 1 and therefore members being disadvantaged by not having the opportunity to participate in the CDC arrangement for a long enough period to benefit (eg from pooling of longevity risk). The draft code helps to mitigate this risk, eg the expectation that a multi-employer CDC scheme considers from the outset when it is likely that continuity option 3 will become a viable option and gives an estimated timeframe for including the details in an updated strategy.

Promotion and marketing

Question 24: “Are the promotion and marketing expectations that we have set out sufficiently comprehensive for those seeking to set up and run a multi-employer CDC scheme?”

As a small point, in the Promotion and marketing: Introduction section we suggest that the bullets setting out the FCA test for inducement (from PERG 8.4.4), replicate the wording in full, ie with the “and” at the end of the first bullet, to make it clear that both limbs must apply in order for something to be an inducement.

Question 25: “Is the balance between the obligations of the promoter and those of the trustees sufficiently clear, and workable in practice?”

The allocation of responsibilities in relation to promotion and marketing could be clearer, particularly for trustees, given that they cannot promote or market the scheme. For example, the Promotion and marketing: Rectification section refers to the trustees having to show evidence about the scheme proprietor assessing risks (rather than it falling directly on the scheme proprietor).

It would be especially helpful for TPR to explain what is meant by “approval” of certain promotion and marketing material – whose responsibility this is and TPR’s expectations in relation to the approval process. For example, under the Promotion and marketing to employers: Systems and processes section, it states that TPR will check that there is a plan for producing and issuing promotional materials and there is “evidence that the trustees are consulted and provide their approval for the plan and any ad-hoc updates to the plan”.

Other issues

Question 30: “Do you have any other issues that you wish to raise in relation to this code, the approach we have taken, or the expectations that we have set out?”

Please see our “general comments” above.

Legislative references – points of detail

The footnotes are really useful but will need to be checked to ensure that:

  • there are footnotes for all statutory references
  • they refer to the correct statutory provision, and
  • there are references to the statutory provision for both single and multi-employer CDC schemes (where relevant).

We spotted the following in our review, but have not checked every reference:

  • footnote 35 (regarding requirement to sectionalise) should also refer to section 3 of the PSA21 and Regulation 27 of the 2025 Regulations
  • footnote 40 (regarding application fees) should refer to regulation 7(4) of the 2022 Regulations and regulation 30(5) of the 2025 Regulations rather than regulation 7(5) of the 2022 Regulations
  • the requirement for the scheme proprietor to prepare a business plan (opening paragraph of financial sustainability: business plan (multi-employer CDC schemes only) should include the relevant statutory reference as a footnote (ie section 14A(1) of the PSA21)
  • footnote 98 (regarding submitting the business plan) may benefit from checking, as the reference to “Reg 26 UMES regs” may be incorrect, and
  • footnote 111 should also refer to regulation 38(2) of the 2025 Regulations (as well as regulation 15(2) of the 2022 Regulations).

It would also be useful if the terminology is consistent throughout, eg the Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 are referred to as both the “2025 Regulations” and the “UMES Regulations”.

[1] Paragraph 49 of TPR’s Code of Practice no. 15: Authorisation and supervision of master trusts