The purpose of this type of collective defined contribution (CDC) scheme is to allow DC pension savers to transfer into a collective fund at retirement (i.e. CDC in decumulation rather than whole-life accumulation and decumulation) that would provide them with "a trustee managed income for life, adjusted annually based on investment performance and scheme sustainability."
Background
Phase 1 in the development of a CDC framework, covered single and connected employer CDC schemes culminating with the launch, in October 2024, of the Royal Mail Collective Pension Plan.
Phase 2 deals with the laying of legislation to enable whole-life unconnected multiple employer CDC pension schemes, for which a consultation outcome2 to the October 2024 consultatsion was published at the same time as this one, together with an updated set of final draft regulations. This legislation is planned to come into force on 31 July 2026.
The 2024 consultation ended with a request from the DWP to "anyone who is currently developing or exploring trust-based decumulation-only CDC options" to make contact.
There is also an intention to amend existing legislation in order that trustees may make bulk transfers, without consent, to authorised CDC schemes (along the same lines as bulk transfers to authorised master trusts).
Retirement CDC pension schemes
The consultation sets out the government's policy on the scope of Retirement CDC schemes and how they could operate, providing access to CDC benefits for members at retirement.
They would operate under a trust rather than as a contract-based pension scheme and be a form of unconnected multiple-employer scheme with the same tax treatment as other occupational pension schemes. They would be a section of a master trust or of an unconnected multiple-employer scheme, but only for pensioners. This approach would prevent a large number of this type being established and would enable them to benefit from economies of scale and operational expertise.
One of the provisions in the current Pension Schemes Bill is for trustees to design and make available default pension benefit solutions. This could be within the member's own existing pension scheme or via a transfer to an external scheme where this could provide a better outcome than a solution the trustees could make available. A transfer to a Retirement CDC scheme could be part of such a qualifying pension benefit solution.
Any Retirement CDC scheme would have to obtain authorisation from The Pensions Regulator to operate. Once authorisation is received, the scheme would have to begin operating within 24 months from the date the Regulator receives the application. This is the same deadline that is being put in place for unconnected multiple-employer CDC schemes.
The consultation document contains details about the application process, the authorisation process (including the fit and proper persons requirement), scheme design, investment strategies, financial sustainability and scheme proprietor requirements (including the business plan requirement), and adaptation to the promotion and marketing criteria applying to the multiple-employer CDC schemes (including a prohibition on prospective member marketing).
The same principles covering valuation and adjustment provisions that will apply to multiple-employer CDC schemes would remain crucial for Retirement CDC schemes and, therefore, the consultation document contains details about how cohorting might work for Retirement CDC schemes.
The intention is for the same supervision requirements applying to multiple-employer CDC schemes to also apply to Retirement CDC schemes, including the occurrence of significant and triggering events which may affect the ability of a scheme to continue to meet the authorisation criteria or pose a risk to the future of a scheme.
As prospective members of a Retirement CDC scheme may not have been given information during an accumulation stage of a CDC scheme, they are going to need clear communications about the scheme, and these would come directly from the trustees of the member's existing scheme (unless they are within a different section of a master trust that also provides CDC benefits). There are challenges in this area which the DWP asks questions about.
Other considerations include administration charges (and a charge cap) and how existing requirements (under the stronger nudge regulations) for trustees to offer to book a Pension Wise appointment and provide pensions guidance are met.
Next steps
This consultation closes in a relatively short time — on 4 December 2025. There are 18 questions.
The document includes an indicative roadmap that builds on the one published in June 2025 as part of the Pension Schemes Bill.
Essentially, Retirement CDC schemes will need to wait until a number of other steps have been completed, not least the passing of the Pension Schemes Bill, a code of practice being in force covering unconnected multiple-employer CDC schemes, as well as Retirement CDCs, and the authorisation of both types of CDC schemes. The roadmap contains detail and potential dates for all of this over the next three years.
