TPR urged to finalise CDC code of practice 'as soon as possible'

The Pensions Regulator (TPR) should finalise its code of practice for the authorisation and supervision of collective defined contribution (CDC) schemes "as soon as possible" to allow employers considering CDC to move forward, according to the Association of Consulting Actuaries (ACA).

In response to the regulator’s recent consultation on the code of practice, the ACA suggested that the regulator has "clearly put a significant amount of consideration" into the appropriate governance structures, describing the draft code as “extremely comprehensive”.

Considering this, whilst the ACA's response "inevitably" highlighted a number of areas in which it would like to see changes, it argued that the draft code is nonetheless a "very helpful document", urging TPR to finalise the code “as soon as possible”.

ACA Pension Schemes Committee chair, Peter Williams, also encouraged TPR to update the industry on developments in their expectations, as the first schemes progress through the authorisation process - perhaps via informal routes such as blogs if this allows information to be published sooner.

"This will ensure the industry is aware of the latest expectations," he continued. “As CDC regulations evolve to permit wider forms of CDC, including profit-making master trusts, we believe little extension of the draft code would be required.

“Although we expect single employer CDC schemes to be of more interest to larger employers, the anticipated extension to master trusts will open up the option for medium and smaller employers. In the ACA’s 2021 pensions trend survey, 25 per cent of respondents indicated that their business might consider a CDC master trust”.

However, whilst ACA's response suggested that the level of detail seems appropriate for master trusts, it also echoed recent concerns on the authorisation requirements for single employers, arguing that the draft code is “disproportionately extensive for single employer CDC schemes”.

In light of this, the ACA called for a more streamlined assessment of systems and processes for single employer CDC schemes, suggesting that it would be helpful to have a shorter list of the essential requirements of interest to TPR, rather than a "long and wide-ranging list of 'matter more likely to satisfy TPR'".

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