Collective Defined Contribution (CDC) Scheme developments

Extension of CDC schemes to non-associated multiple employer schemes

The DWP has published a press release and  response to its October 2024 consultation on draft regulations extending collective defined contribution (CDC) provision to non-associated multi-employer schemes. 

The consultation proposed amendments to the provisions under the Pension Schemes Act 2021 for CDC schemes to accommodate unconnected multiple employer schemes, together with consequential changes to other legislation.

The majority of the 50 consultation respondents endorsed the DWP’s plans. The revised draft Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 have been laid before Parliament. They are due to come into force on July 31, 2026, subject to obtaining parliamentary approval. 

In addition, further regulations including corrections to errors in previous regulations have been laid before parliament and will come into force on December 4, 2025.    

The DWP intends to bring an updated Pensions Regulator code of practice into force as soon as practicable with the aim of allowing unconnected multiple employer schemes to be able to apply to the Regulator for authorisation to operate from summer 2026. 

Consultation on Retirement Collective Defined Contribution pension schemes

The DWP has also published a consultation paper seeking views on proposals for the creation of a new type of CDC scheme for pensioner members only – a “Retirement CDC scheme”.

These schemes would allow individuals who have DC savings pots to transfer at retirement into a pooled fund providing trustee-managed income for life, with annual adjustments based on investment performance and scheme sustainability. Retirement CDC schemes would operate as sections within Master Trusts or unconnected multiple-employer schemes and will be of interest to DC schemes needing to provide default pension benefit solutions for the decumulation phase, which is a new duty under the Pension Schemes Bill. 

The consultation closes on December 4, 2025.

The proposals above on multi-employer and retirement CDC provision build on the progress made by the UK's first single-employer CDC scheme, the Royal Mail Collective Pension Plan, which was launched last October and now has over 100,000 members. The format reflects growing demand for pensions that deliver a lifelong income.