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The Pensions Regulator (TPR) has assessed and authorised the UK’s first collective defined contribution (CDC) pension scheme, the Royal Mail Collective Pension Plan (RMCPP).
TPR highlighted the “milestone” as demonstration of how the regulator is pursuing its strategy to embrace innovation to help meet pension savers’ needs.
Commenting on the news, TPR executive director of frontline regulation, Nicola Parish, said: “I am delighted that we have authorised the first CDC scheme, which is a clear demonstration that we are serious about embracing innovative approaches to deliver the pensions of tomorrow.”
Minister for Pensions, Laura Trott, added: “TPR authorising the first CDC scheme is a landmark moment, and this is just the beginning.
“We have seen the positive effect of these schemes in other countries and our plans to extend our CDC framework will enable more pensioner savers to achieve the retirements they want.”
Applications for CDC schemes officially opened in August 2022, after the Pension Schemes Act 2021 first introduced an authorisation and supervision regime for CDC schemes.
Under the regime, applicants are required to show they meet stringent criteria, including that those who run the scheme meet fitness and propriety requirements, have the right systems and processes in place, can show the scheme is financially sustainable and have robust member communications.
Although CDC schemes can only currently be set up by single employers, the Department for Work and Pensions recently consulted on plans to extend CDC to accommodate multi-employer schemes, also considering the potential for CDC as a decumulation only option.
Plans for the RMCPP were first announced in 2018, before being confirmed following a member consultation in 2022.
However, the group recently confirmed that the proposed scheme is expected to exceed initial estimates by £30m per annum, as a result of payroll costs increasing since the scheme was first announced in 2018.
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