On 23 October 2025, the Department for Work and Pensions (DWP) published two significant updates to the UK’s Collective Defined Contribution (CDC) pension framework:
- Final regulations enabling CDC for unconnected multiple employer schemes (UMES)
- A consultation on Retirement CDC schemes for pensioner members only, to allow savers with Defined Contribution pots to convert them into a CDC pension at retirement.
Multi-employer CDC regulations finalised
The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 were laid before Parliament on 23 October 2025 following consultation late last year and an impact assessment. These provisions allow CDC schemes to operate across multiple, unrelated employers (including master trusts), broadening access. Previously only CDC schemes serving a single employer or a group of connected employers were possible. Key features of the regulations include:
- Authorisation and oversight – Requirements for UMES to become authorised by The Pensions Regulator (TPR) and be subject to regulatory oversight, meeting fit-and-proper management standards and transparency obligations.
- Benefit structure – New multi-employer CDC schemes will build up benefits on an “actuarial equivalence” basis meaning that contributions are converted into CDC pensions of equal expected value, ensuring entrants do not subsidise each other unfairly. Actuarial equivalence can be calculated at either a member or employer level.
- Financial sustainability – Schemes must demonstrate a sound business strategy and submit a business plan to TPR to show they can meet setup and running costs and handle potential triggering events (e.g. wind-up scenarios).
- UMES-specific criteria – UMES must have a single scheme proprietor and ensure clear and non-misleading promotion; trustees are prohibited from promoting or acting as the scheme’s marketing agent or chief financial officer.
- Governance – The regulations amend existing acts to include provisions for the scheme proprietor to approve the viability report and to put in place continuity options if the scheme encounters difficulties.
The Government intends to bring the legislation and an updated Pensions Regulator’s Code of Practice into force on 31 July 2026 to allow schemes to apply for authorisation to operate.
Retirement-only CDC consultation launched
Alongside the final UMES regulations, the DWP also launched a consultation on “Retirement Collective Defined Contribution (CDC) pension schemes”, to introduce a new type of UMES CDC scheme that operates for pensioner members only, and an assessment of policy options. These schemes would begin at retirement, allowing DC savers to transfer their pots into a collective fund to access a lifelong CDC income in retirement, initially targeting increases of at least CPI. The consultation sets out the Government’s thinking on the scope for Retirement CDC schemes and how they could operate in practice. The DWP proposes that Retirement CDC schemes be offered initially only via trust-based pension schemes (occupational schemes or master trusts) in which trustees decide to offer a Retirement CDC section at retirement, rather than through a direct retail market.
The consultation lists 18 specific questions covering areas such as:
- Design considerations – the differences in investment strategy from whole-life CDC, scale of membership and pot sizes needed for stability, whether to allow underwriting, the potential inclusion of death benefits, and whether all UMES requirements for business plans and funding should also apply.
- Pricing considerations – considering an actuarial equivalence test to ensure member pricing is fair and accurate and that new entrants do not disadvantage existing members when joining a scheme. Views on “cohorting” are sought i.e. grouping members who join at similar times together to handle new entrant pricing and benefit adjustments. For example, without cohorting, a well-performing scheme would otherwise offer new retirees much lower starting pensions to maintain a high expected adjustment level. Schemes could close a cohort and open a new one when terms between new and existing members diverge.
- Member experience – how member communications should be delivered in practice. The DWP suggests that prospective Retirement CDC members receive information through the trustees of their current DC scheme and not directly from providers. Trustees would relay quotations and oversee communications to avoid provider “marketing” and help build member understanding. The consultation also considers standardising illustration assumptions to aid comparisons.
- Charges – whether a charge cap should be introduced for Retirement CDC and at what level, if there are any potential areas of regulatory arbitrage or inequality between Retirement CDC and other retirement income products that regulators should address.
- Bulk transfers – feedback on a draft amendment to allow bulk transfers without consent into CDC.
The consultation also includes a roadmap for the delivery of Retirement CDC with:
- Regulations to enable Retirement CDC expected to be laid in early 2027
- Legislation and a Code of Practice from TPR in force by early 2028
- Applications from prospective Retirement CDC schemes to TPR in 2028.
The roadmap also sets out that TPR will begin to receive applications from prospective whole-life UMES in late 2026.
The dates noted above are the earliest expected dates for each stage. The DWP states an aim to have enabling provisions for Retirement CDC schemes in place as close as possible to the point at which schemes begin to comply with their Guided Retirement duties, with the roadmap showing this to be shortly after those duties come into effect. In any interim period, Retirement CDC could form part of a scheme’s pension benefits strategy as something to pursue as an alternative to the default pension plan for members retiring before Retirement CDC schemes are available.
The DWP estimates that up to 16 million DC savers could benefit from Retirement CDC schemes, with some modelling suggesting potential boosts to retirement income of up to 60% from use of CDC compared to traditional drawdown or annuity options.
The consultation closes on 4 December 2025.
