TPR authorises Royal Mail as UK’s first CDC scheme

The authorisation of the Royal Mail Collective Pension Plan (RMCPP) is the first in the UK, following TPR’s Pension Schemes Act 2021, which introduced an authorisation and supervision regime for CDC schemes.

CDC schemes must meet stringent criteria including fitness and propriety requirements for those running the scheme, having the correct systems and processes in place, demonstrating financial sustainability and having “robust member communications” according to TPR, which has powers to intervene if necessary.

TPR said CDC schemes can currently be set up by single employers for that employer only, or for employers in the same group of companies.

It said the 2021 Pension Schemes Act also “contains powers to enable further developments of the CDC market, such as schemes for groups of employers who aren’t legally connected”.

It comes after the Department for Work and Pensions (DWP) consulted on extending opportunities for CDC schemes earlier this year, to which TPR said it “will respond in due course”, adding it “is working closely with the DWP in this area”.

TPR said the authorisation was “a milestone” and shows how it is “pursuing its strategy to embrace innovation to help meet pension savers’ needs.

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 said: “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.”