Collective Defined Contribution meaning

TPT has become the inaugural pension provider to pledge the rollout of a UK multi-employer CDC scheme, widely championed by industry and policy makers alike as the next stage of private sector pension saving in the UK. This follows Pensions Minister, Torsten Bell, stating on 29 April 2025 that he intends to bring forward new legislation towards the end of the calendar year to widen the rules for CDC schemes. 'The pensions industry is at a point where innovation is critical', said David Lane, Chief Executive of TPT Retirement Solutions...

In this issue: The Pensions Regulator Pensions dashboards Collective defined contribution schemes Public sector pensions Daily and weekly news alerts Dates for your diary Trackers The Pensions Regulator TPR publishes final Fast Track parameters The Pensions Regulator (TPR) has issued a standalone, finalised version of the Fast Track tests and conditions. Previously included as Appendix 1 to TPR’s response to its Fast Track and regulatory approach consultation, this document details the parameters that a defined benefit (DB) scheme must meet when submitting an actuarial valuation with an effective date on or after 22 September 2024 under the Fast Track route. In essence, the framework sets expectations across funding and investment stress, technical provisions, investment risk, and the recovery plan. In completing the parameters, TPR made a number of minor tweaks to better clarify its intentions. Fast Track is one of two newly introduced pathways—alongside the Bespoke route—available to trustees when filing a DB scheme valuation dated...

In this issue: The Pensions Regulator Funding, surplus and investment Members and benefits Daily and weekly news alerts Dates for your diary Trackers The Pensions Regulator TPR enhances oversight of the largest DC schemes to improve member outcomes The Pensions Regulator (TPR) has unveiled enhancements to its supervision of master trusts and defined contribution (DC) schemes after a 12‑month review. The redesigned model groups schemes into four supervisory segments with bespoke engagement to spot risks sooner and lift saver outcomes. These cover monoline, commercial and non‑commercial master trusts; collective DC schemes; and single plus connected employer DC schemes. TPR’s priorities are securing value for money for all savers and setting clear expectations on investments, data quality and at‑retirement innovation. Larger schemes will be supported by dedicated multi‑disciplinary teams to enable more targeted, expert‑level interactions. The change marks a tilt towards a more prudential regulatory stance, addressing scheme‑specific and market‑wide risks across the UK pensions landscape. TPR said...

A collective defined contribution (CDC) scheme is a type of defined ambition arrangement. What is defined ambition? At its core is the principle of risk sharing, meaning the pension scheme’s risks are not shouldered wholly, or mainly, by either the employer or the members. A defined ambition pension combines aspects seen in traditional defined benefit (DB) schemes with elements typical of traditional defined contribution (DC) schemes. According to the Department of Work and Pensions (DWP), the purpose of a defined ambition pension is to provide members with greater certainty than a pure DC pension, while aiming for less cost volatility for employers than current DB pensions. In a traditional DB arrangement, the employer typically carries the full burden of risks linked to investment performance, inflation and how long members live. There has been a marked move away from traditional DB owing to factors including economic pressures and the treatment of DB liabilities in company accounts...

FORTHCOMING CHANGE: On 23 October 2025, the DWP opened a consultation on proposals for ‘Retirement CDC schemes’, a fresh pension design aimed solely at retired members. Under the plans, savers with DC pots could, at retirement, move their funds into a collective pool that pays trustee-run lifetime income, recalibrated each year in line with investment outcomes and the health of the scheme. These Retirement CDC arrangements would sit as sections within Master Trusts or in unconnected multi-employer vehicles. For more detail, see: Decumulation-only CDC schemes, below. For legislative consistency, the Pension Schemes Act 2021 (PSA 2021) uses ‘collective money purchase’ for what are commonly called ‘collective defined contribution’ (CDC) schemes. This Practice Note treats the two labels as interchangeable. Why develop a CDC framework? CDC works by sharing risk across a broad membership, allowing schemes to aim for (though not legally guarantee) a target pension; this relieves employers or trustees of uncapped obligations and spares individuals the burden of turning their pot into a lasting income. Such...

ARCHIVED This archived Practice Note sets out the earlier legal framework that had been established for collective defined contribution (CDC) arrangements under the Pension Schemes Act 2015. It is not maintained and is supplied solely for general background reference. For up‑to‑date information on the current legal framework for CDC, see Practice Note: Collective defined contribution (CDC) schemes—an introduction and Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021, which provide the relevant, current guidance. What are collective defined contribution schemes? CDC schemes are a form of defined contribution arrangement in which assets are pooled on behalf of members, and no individual member has an interest in particular assets. The government is championing these schemes as part of its reform agenda to reshape workplace pensions. This Note offers a short explanation of how they operate, comments on the advantages and disadvantages linked to them, and summarises the government’s proposed legislative changes intended to facilitate CDC schemes in the UK. How do CDC schemes work? ...