Making CDC more widely available
The 2025 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 line with the guided retirement duty. In particular, it was "progressing work on CDC schemes to be used only in retirement" with a view to allowing a DC pot to be transferred to a CDC scheme at retirement.
Since then, a number of steps have been taken in relation to both "unconnected multiple employer" and "retirement" CDC. For more information, please go to "current position and projected timings" below.
Following an announcement at Budget 2025, changes made by section 60 of the Finance Act 2026 allow HMRC to de-register or to refuse to register an unauthorised CMP scheme, and give HMRC a regulation-making power so that it can more efficiently legislate for changes to CDC schemes or benefits in the future.
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 have been able to 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.
Allowing "retirement CDC schemes" will 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 and took effect on 31 July 2026.
- 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.
On 29 April 2026 the Pensions Regulator published the response to that consultation and a final draft code of practice was presented to Parliament. The existing code was revoked and the new one brought into force on 31 July 2026, and the new code and updated and extended Pensions Regulator guidance can now be found on the Pensions Regulator's website.
This timeline suggests that the aim is for the Pensions Regulator to begin to receive applications for authorisation in 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 Act" (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 closed on 4 December 2025. In the July 2026 update to its workplace pensions roadmap, the government said that it hopes:
- To launch a consultation on draft regulations to allow retirement CDC between October and December 2026.
- That final regulations will be laid before Parliament and the Pensions Regulator will consult on changes to its CDC scheme code of practice at some point between October and December 2027.
- That the legislation and updated Pensions Regulator code will come into force, making it possible for applications for authorisation to begin, at some point between October and December 2028.
That the first retirement CDC schemes might be authorised at some point between April and June 2029.
You can read more about CDC and retirement CDC in this House of Commons Library briefing paper.
