TPR will send schemes annual evaluations setting out risks, actions and the regulator’s planned supervisory “intensity”.
The regulator has published its compliance and enforcement policy for CDC schemes, setting out a “risk-based regulatory approach” and outlining how CDC providers can expect to be regulated.
If it is concerned that a CDC scheme is falling short of requirements on operations, funding or governance, TPR will send risk notices detailing corrective actions for trustees.
Neil Bull, TPR’s executive director of market oversight, said: “We support innovation in the market that benefits savers and believe CDCs offer trustees and employers a further option to provide members with a pension. But we expect savers to be protected.
“We are excited about the government’s commitment to widening CDCs to multi-employer schemes.”
Operating principles
In its policy, TPR set out five “key operating principles” that it will use when supervising CDC schemes.
It said it would be “engaged and responsive” to ensure it understands the issues faced by CDC schemes, as well as “proactive and forward-looking” – aiming to intervene early when needed to protect member outcomes.
A “strategic and targeted” approach would ensure TPR took “appropriate regulatory action to address systemic risks and issues in the pensions landscape”, it said.
It also pledged to be “proportionate and risk-based” as well as “consistent... with the approach we have communicated”.
Annual evaluations
To aid these core principles, TPR will send out annual evaluation reports to CDC providers.
These reports, the regulator said, would summarise:
TPR’s evaluation of the scheme
The “intended supervisory intensity”
Key risks to the scheme
Actions that the regulator expects the scheme to take
A planned engagement timetable
TPR said it would keep the frequency of its CDC supervisory processes, as well as the level of detail it requests, under review in line with the level of risk it observes in each CDC scheme.
“If those operating a scheme do not actively co-operate and engage with TPR, it may de-authorise the scheme,” the regulator stated.
TPR’s full CDC supervisory policy is available on the regulator’s website.
Further reading
Church of England eyes CDC as consultation launches (8 October 2024)
CDC legislation planned for next year, says pensions minister (8 November 2024)
Royal Mail opens collective DC scheme (7 October 2024)
