The Pensions Regulator (TPR) has been encouraged to provide further clarity on several aspects of its proposed consolidated code of practice for collective defined contribution (CDC) schemes.

In response to the regulator’s consultation to enable the introduction of multi-employer CDC schemes, Sackers welcomed TPR’s approach and said it would make it easier to follow the code and apply it in practice.

However, the law firm highlighted the importance of recognising trustees’ overarching trust law duties, as the nature of CDC schemes was likely to involve CDC trustees considering different stakeholder interests over time.

It suggested that the regulator made these duties more explicit in the code to help trustees with their decision making, describing this as “crucial” due to the potential complex questions regarding fairness and intergenerational matters in CDC schemes.

Adding to this, Sackers partner, Helen Ball, said: “To strengthen the code’s usability, we encourage TPR to clarify the responsibilities of different parties involved in multi-employer CDC schemes, especially regarding the preparation and approval of business plans, and promotion and marketing obligations.”

Meanwhile, Sackers partner, Andrew Worthington, highlighted the importance of considering how the master trust and CDC authorisation and supervision regimes will function together, as master trusts seemed to be the most likely vehicle for the first wave of multi-employer CDC sections.

“We believe more guidance would be beneficial to help schemes manage these ‘mixed benefit’ arrangements,” Worthington continued.

“With further changes likely on the horizon to accommodate retirement-only CDC schemes, it is reassuring that TPR plans to evolve its approach to keep pace with the changing market.”

The Society of Pension Professionals (SPP) has also issued its response to TPR’s consultation, and provided several comments to support the improvement of the code and its effective implementation.

The association emphasised the need for clarity on where requirements differed for scheme types and to avoid disproportionate or overly prescriptive measures that could create unnecessary barriers for new entrants to the market.

Furthermore, the SPP urged TPR to consider providing additional guidance on issues such as expectations of scheme proprietors in multi-employer CDC, business plans and continuity strategies, and fitness and propriety expectations.

It also called on the regulator to consider providing more detail on its expectations regarding systems and processes.

“A unified CDC code of practice should help to reduce fragmentation and encourage wider market participation by offering clarity and predictability,” said SPP CDC Committee chair, Keith McInally.

“Proportionate implementation will be important to ensure that TPR is clear regarding its expectations for CDC schemes, whilst also avoiding unnecessary regulatory burdens.”

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