Planned rules for multi-employer CDC schemes could inadvertently restrict providers’ ability to communicate and undermine the “regulatory intent” of the government’s proposals, says the industry body.
In the trade body’s response to the government’s consultation on CDC scheme rules, the SPP warned that planned rules blocking trustees from being involved in marketing and promoting their scheme “could plausibly constrain communications with current or prospective employers that largely form part of good governance of the scheme by trustees”.
Edd Collins, chair of the SPP’s CDC group, emphasised that the society “broadly welcomes” the proposals.
“We hope that our recommendations relating to some of the areas of concern are taken on board and that these help improve the legislation,” he said. “Ultimately, we all share the same ambition to make sure as many savers as possible can take advantage of the numerous benefits of CDC pension schemes.”
In its response, the SPP also questioned whether proposed constraints on changes to investment strategies “meet the desired legislative intention”.
The rule in question is designed to ensure that benefits are not underpinned by different investment strategies by the same section of a CDC scheme.
However, the SPP warned that the rule as currently worded “would not prevent significant changes to the investment strategy for an existing section”.
The society added: “Further, it is likely to be difficult for trustees to accurately set out in their viability report what changes to investment strategy may cause them to sectionalise the scheme in future when the future environment they may be operating in at that point could be markedly different to the current environment.
“This may result in trustees including relatively vague or qualitative commentary in this regard, which may serve little purpose.”
The CDC consultation closes on 19 November.
