The Pensions Regulator (TPR) may act against trustees if they fail to identify “unclear or misleading” communications in relation to collective defined contribution (CDC) pension schemes.
TPR’s code of practice for CDC schemes was laid before parliament this week (29 April), ahead of coming into force around October this year.
The regulator also published its response to the CDC code consultation, which closed earlier this year, and stated that it would hold trustees accountable for poor communications. This was an area highlighted by many consultation respondents as needing clarification.
“Trustees have an important role in challenging key promotional materials… On the rare occasion trustees may not have identified issues, we do reserve the right to also take action against them.”
TPR consultation response
“As the trustees are prohibited from undertaking any of these activities, the responsibility would sit with the scheme proprietor and/or any other person they have delegated this responsibility to,” TPR stated.
“Trustees have an important role in challenging key promotional materials if they believe they are unclear or misleading, or both. On the rare occasion trustees may not have identified issues, we do reserve the right to also take action against them.”
The regulator also tightened up some wording around inducements and promotions in response to concerns raised.
An evolving regulatory approach to CDC
In its consultation response, TPR said it was “committed to a pragmatic regulatory approach” that will develop as the CDC market evolves.
The code has been expanded to include multi-employer schemes, with the first schemes expected to come into operation from early 2027, according to the regulator. It will be amended again once the government finalises retirement-only CDC rules.
TPR said it was already in discussions with “several possible market entrants”. TPT Retirement Solutions has already declared its intention to launch a CDC scheme.
Master trust provider Lifesight aims to launch a retirement-only CDC model, and others are exploring this path.
Richard Knox, TPR’s executive director of strategy, policy and analysis, said: “Our goal is to help transform a savings system into a pension model that offers people reliable, sustainable income throughout retirement.
“CDC schemes can help to deliver that future. We are already in discussions with several potential entrants to this market. I encourage others considering offering a CDC service to speak with our innovation service.”
TPR said the new code sets out its “expectations of CDC schemes, the criteria for their authorisation, and how TPR will use its powers in this market”.
Outlook 2026: Making collective DC a reality
As part of our 2026 Outlook series, Pensions Expert asked CDC experts for their views on what this year holds for the nascent CDC sector, what challenges are still to be met, and how proponents should go about communicating this new model to savers. Read the full article.
