The Department for Work and Pensions (DWP) has launched a consultation on draft legislation to extend collective defined contribution (CDC) provision beyond single or connected schemes.

The draft legislation removes the exclusion of unconnected multiple employer CDC schemes from operating under the existing CDC provisions and sets out what CDC schemes that are whole-life unconnected multiple employer schemes must do to become authorised and to operate effectively under regulatory oversight.

The DWP said that the authorisation regime was designed to protect members and to build confidence in this new type of CDC scheme by ensuring only "soundly designed and well-run" schemes can operate.

The draft regulations also make a number of changes to legislation arising from the expansion of CDC schemes to multiple unconnected employers.

As part of its consultation, the DWP outlined a number of specific questions about some elements of the draft regulations, although it is also calling for broader views on whether the regulations effectively deliver its intended outcomes.

Commenting in the foreword of the consultation, Pensions Minister, Emma Reynolds, said: “CDC schemes are an important addition to the UK pensions landscape and when well designed and well run, they have the potential to improve the pension outcomes for millions of savers in the future.

“The Pension Schemes Act 2021 and subsequent secondary legislation introduced the legislative framework to introduce single or connected employer CDC schemes to the UK.

“I am delighted to say that this consultation launch coincides with the official launch of the UK’s first CDC scheme, the Royal Mail Collective Pension Plan.

“This is a truly landmark moment for the UK pension landscape and this consultation now builds on the momentum in this area.

“Acknowledging the strong industry and parliamentary support for broadening CDC provision further, I intend to deliver it to ensure as many savers as possible can take advantage of the numerous benefits of CDC.”

Industry experts had previously expressed hope that the launch of the Royal Mail Collective Plan could act as a "stepping stone" towards scalable whole-life multi-employer CDC schemes.

Plans to extend CDC were also high up on the industry’s wish list ahead of the 2024 general election, after the former government’s plans to consult to extend CDC provision were repeatedly delayed.

---