The Pensions Regulator (TPR) has shared its new compliance and enforcement policy for collective defined contribution (CDC) pension schemes, which outlines how providers can expect it to supervise them.

TPR said that it will supervise CDC schemes in a "collaborative and proportionate" way, with this supervision set to focus on delivering outcomes for savers and preventing compliance breaches or harms to savers before they occur.

As part of its supervision, TPR will send CDC scheme trustees an annual evaluation regulatory report summarising its evaluation of the scheme, its intended supervisory intensity, the key risks observed, actions it expects the scheme to take, and its planned engagement timetable.

TPR said that it will keep the intensity, including frequency and detail, of its supervision of CDC schemes under review, with this to be primarily determined by its assessment of the scheme’s level of risk.

However, TPR said that it may also consider using its new powers, such as information requests, risk notices and improvement notices, when it is concerned a CDC pension scheme is not being effectively run, governed or funded.

The regulator said that it will use these risk notices where it wants to see trustees planning corrective action, which they must then deliver, with risk notices to be used instead of, or in advance of, more serious powers, including de-authorisation.

Ultimately, however, it warned that if those operating a scheme do not actively co-operate and engage with us, it will be difficult for TPR to be satisfied that it continues to meet the criteria and its wider obligations.

Given this, TPR confirmed that, if those operating a scheme do not actively co-operate and engage with TPR, it may de-authorise the scheme.

TPR executive director of market oversight, Neil Bull said: “We support innovation in the market that benefits savers and believe CDCs offer trustees and employers a further option to provide members with a pension. But we expect savers to be protected.

"We are excited about the government’s commitment to widening CDCs to multi-employer schemes.”

CDC schemes' must be authorised by TPR to operate and, once up and running, are supervised by TPR under five key operating principles.

This includes whether the scheme is engaged and responsive, proactive and forward-looking, proportionate and risk-based; and whether the scheme is consistent.

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