Making CDC more widely available
The workplace pensions roadmap said that, in autumn 2025, the government would "lay regulations…to allow multiple unconnected employers to establish a [collective defined contribution (CDC)] scheme." It also said that the government was "exploring ways to add to the suite of options available to (DC) trustees as they develop default pension benefit solutions for their members". In particular, it was "progressing work on CDC schemes to be used only in retirement" with a view to allowing members who have saved into a DC scheme to transfer their DC pot to a CDC scheme at retirement.
The next steps in relation to "unconnected multiple employer" and "retirement" CDC were taken in October 2025. For more information, please go to "current position and projected timings" below.
Budget 2025 included a confirmation that the upcoming Finance Bill will allow unconnected multiple employer CDC schemes to apply to HMRC to become a registered pension scheme. It will also allow HMRC to refuse to register or to de-register an unauthorised CMP scheme and include a regulation-making power to allow HMRC to legislate for CDC schemes more efficiently in the future. There is more detail in this policy paper. Timings are confirmed in this HMRC newsletter.
Why this is important
Collective defined contribution schemes are a relatively new type of pension scheme with the potential to combine greater certainty for members with limited risk for employers. For example, the employer and active members might pay contributions to a trustee, who will invest those contributions in order to provide members with a cash lump sum and target pension income. The pension income could be adjusted to take account of investment performance and how much the plan expects to pay out to members. The lump sum might be guaranteed (and so would not go down) but might be increased if funding levels permit.
In its original form, the legislation only allowed single and connected employers to establish this type of scheme. In practice, this has meant that only larger employers can offer a CDC scheme to their employees. Extending the legislation to allow "unconnected multiple employer" (UME) CDC schemes opens the door to (for example) the creation of new CDC master trusts or the addition of a CDC section to an existing DC master trust. The creation of CDC master trusts or master trust sections could make it easier for many more employers to consider offering CDC to their employees.
If the government goes on to permit "retirement CDC schemes" then this could open the door for DC trustees and providers to consider offering access to this kind of scheme as a default pension benefit option in connection with the upcoming guided retirement duty. Retirement CDC could provide "a trustee managed income for life, adjusted annually based on investment performance and scheme sustainability".
Current position and projected timings
- Unconnected multiple employer CDC schemes and changes to the legislation applying to existing CDC schemes
A consultation on draft regulations to permit "unconnected multiple employer" (UME) CDC schemes (for example, new CDC master trusts or the addition of a CDC section to an existing DC master trust) and to make other changes to the legislation applying to CDC schemes was launched in October 2024.
In October 2025:
- The government published the response to that consultation.
- The final draft of the regulations needed to change the law to permit (and provide for the authorisation and supervision of) UME CDC schemes was laid before Parliament. (These regulations were made in December 2025.)
- The other set of regulations consulted on (regulations to make changes to the legislation already applying to CDC schemes) was made. These regulations took effect on 4 December 2025
In December 2025 the Pensions Regulator launched a consultation on changes to its CDC scheme code of practice to provide for the authorisation and supervision of UME CDC schemes and sections.
The October consultation response says that the government hopes to bring the regulations permitting the creation of UME CDC schemes and the updated Pensions Regulator code of practice into force "as soon as practicable with the aim of allowing [UME] CDC schemes to be able to apply to the Regulator for authorisation to operate from the summer of 2026" (perhaps 31 July 2026). A timeline suggests that the aim is for the Pensions Regulator to begin to receive applications for authorisation in summer 2026, not for it to have approved any applications by summer 2026.
You can read more about CDC and UME CDC in this House of Commons Library briefing paper.
- Retirement CDC schemes
In October 2025, the government also launched a consultation on the creation of "retirement CDC schemes": schemes to allow "individuals who have saved in DC pensions to access a lifelong CDC income in retirement."
The consultation paper sets out the government’s policy thinking on the "scope for retirement CDC schemes and how they could operate in practice. It explores the key design features, regulatory considerations, and potential legislative changes". For example, the government proposes that:
- A retirement CDC scheme would have to be established as a new "pensioner-only" CDC section in an existing UME CDC scheme (such as a CDC master trust) or an existing DC master trust.
- Retirement CDC schemes would need to seek authorisation from the Pensions Regulator to operate, and would be subject to ongoing supervision requirements. They would need to meet the authorisation criteria for a single or connected employer CDC scheme and the additional authorisation criteria that will apply to UMEs, although some modifications may be made.
- The regulatory framework will flexible enough to allow a range of benefit designs while maintaining appropriate safeguards (for example, annual valuations and adjustments and targeting CPI increases) for members.
- To begin with at least, there will be no market aimed at individual members. The "buying decision" will be taken by the trustees of DC schemes where the trustees deem that a retirement CDC scheme would be an appropriate retirement option for their members. This might be where "a retirement CDC scheme is a default or qualifying pension benefit solution under the guided retirement duties in the Pension Schemes Bill" (either within the same scheme – for example a retirement CDC section within a DC master trust - or part of a formal partnership between a DC scheme and a retirement CDC scheme), or "there is a formal partnership between a DC scheme and the scheme’s chosen retirement CDC scheme to cover instances where members are actively engaged" and choose retirement CDC for their retirement income. Guided retirement is expected to be the main route through which members access retirement CDC.
- DC schemes’ approach to lifestyling might be expected to change depending on the default pension benefit solutions the scheme has in place.
Responses to the consultation "will inform further thinking on how [retirement CDC scheme] provision might be facilitated by trust-based pension providers; further [the government's] understanding of the specific regulatory challenges…scheme design might pose; and help [government] develop ways to mitigate these challenges to ensure that this new scheme type operates effectively and deliver good outcomes for members."
The consultation will close on 4 December 2025. An indicative timeline at the end of the consultation paper suggests that the government hopes:
- To launch a consultation on draft regulations to enable retirement CDC in around mid-2026, shortly before the DWP opens a consultation on detailed policy for the guided retirement duty.
- To lay regulations to enable retirement CDC in the first half of 2027.
- That, at around the same time, the Pensions Regulator will launch a consultation on changes to its code of practice on the authorisation and supervision of CDC schemes to accommodate retirement CDC schemes.
- That the regulations to enable retirement CDC and the updated Pensions Regulator code of practice will come into force (and the Pensions Regulator will be able to start to consider applications for authorisation of retirement CDC sections) between the date on which the guided retirement rules are currently expected to start to apply to DC master trusts (late 2027) and the date on which the guided retirement rules are currently expected to apply to single-employer trusts and group personal pension plans (some time in 2028).
However, these timings are described as the earliest anticipated. As such, trustees are likely to see a gap between the introduction of the guided retirement duty and the availability of retirement CDC options.
You can read more about CDC and retirement CDC in this House of Commons Library briefing paper.
