The pensions industry has been urged to consider the practical challenges of introducing unconnected multi-employer collective defined contribution (CDC) schemes, as commercial arrangements prepare to enter the UK pensions market in 2027.

A new white paper from Aptia, Unconnected Multi-Employer CDC Schemes in Practice, set out key considerations for prospective providers, trustees and employers, including the authorisation requirements and operational challenges associated with the new arrangements.

Its publication follows the introduction of regulations for multi-employer CDC arrangements, which came into force on 31 July 2026.

The regulations allow commercial providers to offer CDC arrangements to multiple unconnected employers for the first time, broadening access to CDC pensions, including through master trusts.

However, Aptia highlighted that research into how these schemes are likely to operate in practice remains limited, with its paper seeking to help employers and trustees understand what good governance and scheme design should look like when assessing prospective arrangements.

Drawing on its experience supporting requests for information and proposals from prospective CDC providers, Aptia examined two key stages of scheme development: authorisation and operation.

The former considers The Pensions Regulator’s (TPR) requirements before schemes can begin accepting contributions, while the latter explores how benefits could be designed and delivered once schemes become operational.

The paper also considers approaches to benefit design, including dynamic accrual, the tax treatment of CDC benefits and the importance of effective member communications, particularly given that CDC benefits are targeted rather than guaranteed.

Commenting on the paper, Aptia head of pensions technical and author of the paper, John Wilson, said: “Interest in CDC has grown steadily over recent years, but until now the practical detail of how a multi-employer scheme gets authorised and then actually runs day to day has been thin on the ground.

“Employers weighing up CDC as an option need to know what good governance and scheme design look like, not just the theory of why collective pensions can deliver better outcomes. That’s the knowledge gap we aim to close with this paper.”

Meanwhile, CDC Forum co-chair, Dr Hari Mann, suggested that the introduction of CDC arrangements presented an opportunity for employers to reassess whether their existing pension provision remained fit for purpose.

He pointed to research from the CDC Pensions Forum suggesting that CDC arrangements could deliver retirement outcomes between 25 per cent and 55 per cent higher than comparable alternatives.

“Any significant innovation in pensions requires careful consideration, robust due diligence and access to the right expertise,” Mann stated.

“Aptia’s White Paper makes a valuable contribution by helping to bridge the gap between understanding the potential of CDC and identifying the practical steps employers need to take.

“It provides a timely and important foundation for informed decision-making as employers consider the next stage of their pensions journey.”

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