The Pensions Regulator (TPR) has begun accepting applications for multi-employer collective defined contribution (CDC) schemes, expanding access to CDC provision beyond the existing single-employer framework.

From 31 July, organisations can apply to set up CDC schemes that cover multiple unconnected employers.

The development follows the introduction of the multi-employer CDC framework, which was welcomed by the pensions industry.

CDC schemes pool members’ contributions and investments, allowing investment risks and rewards to be shared collectively.

Rather than providing an individually owned pension pot, they aim to pay members a target retirement income for life.

However, benefits are not guaranteed and may be adjusted upwards or downwards depending on investment performance and the scheme’s funding position.

The new framework is intended to provide employers and members with an alternative to traditional defined benefit (DB) and defined contribution (DC) arrangements.

Any organisation seeking to establish a CDC scheme must first receive authorisation from TPR, with the regulator stating that the process is designed to provide member protections and ensure appropriate standards of governance and administration.

Alongside opening the application window, TPR has published new and updated guidance explaining how prospective schemes should meet the requirements set out in the multi-employer CDC regulations and what will be expected during authorisation and ongoing supervision.

TPR has encouraged organisations considering establishing a CDC scheme to engage with the regulator at an early stage through its supervision teams and innovation support service.

TPR executive director of strategy, policy and analysis, Richard Knox, described the opening of applications as “an important milestone” in the development of the UK pensions system.

“At TPR, we want everyone to be able to achieve a sustainable income in retirement, and multi-employer CDC schemes could become an important part of the pensions landscape to support this goal," he said.

“We also want a no-surprises approach as new innovations like CDC come to market. That is why we encourage anyone considering establishing a scheme to engage with us early so we can support the process.”

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