The Department for Work and Pensions (DWP) has updated its statutory guidance on reporting costs, charges and other information to take account of the introduction of new collective money purchase schemes.

The updated guidance will be effective from today (21 October), replacing the previous guidance that came into effect on 1 October 2021.

It was updated to reflect changes introduced by 2022 regulations, specifically requirements for collective money purchase schemes, commonly known as collective defined contribution (CDC) schemes.

Under the guidance, trustees of CDC schemes are required to publish their scheme rules, a scheme design statement, a valuation and benefit adjustment statement, and the model used for the calculation of future benefit illustrations.

However, as CDC schemes will only have one arrangement or fund into which contributions will be paid they do not need to identify a default arrangement, instead the illustration will be in respect of the CDC fund and should reflect the relevant design of the fund under the scheme rules.

Applications for CDC pension schemes officially opened on 1 August, in what was highlighted as an “injection of innovation” for the industry, with further plans to consult on new forms of CDC pensions confirmed for "later this year".

DWP also recently suggested that it is "open to hearing about and having discussions" about the use of CDC at the decumulation stage, although it warned that CDC is "not a magic bullet" in improving member outcomes.

Share Story: