The new framework gives employers and members an alternative to traditional defined benefit (DB) and defined contribution (DC) pension arrangements, building on the single-employer system introduced in 2021. CDC schemes offer a target retirement income for life rather than relying on individual pension pots, with benefits adjusted depending on investment performance and funding position.

TPR urged organisations that are considering launching a CDC scheme to engage early with its supervision teams and Innovation Support Service. It has also published new and updated guidance to help prospective schemes understand the authorisation process, its regulatory requirements, and scheme promotion, marketing and sectionalisation.

“We want everyone to be able to achieve a sustainable income in retirement, and multi-employer CDC schemes could become an important part of the pensions landscape to support this goal,” said executive director of strategy, policy and analysis Richard Knox. “We also want a no-surprises approach as new innovations like CDC come to market. That is why we encourage anyone considering establishing a scheme to engage with us early so we can support the process.”

Hymans Robertson head of DC markets Paul Waters said that the opening of the authorisation process was a major milestone and represented “one of the most significant innovations in UK pension provision for many years”.

He added that TPR’s “role in scrutinising and authorising schemes will be critical in building confidence throughout the industry as the market develops”.

“Reaching this stage has required substantial collaboration across government, regulators, providers and advisers, and it’s important to recognise the work that has gone into creating a robust framework for these new schemes,” he continued.

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