New investment opportunities for trustees - the UK’s growing green economy  

In letters to the Bank of England last month, the Chancellor of the Exchequer, Rachel Reeves, set out the remit for the Monetary Policy Committee (MPC), the Financial Policy Committee (FPC) and the Prudential Regulation Committee (PRC).  

The Chancellor confirmed the government’s economic policy objective, and the four strands of its economic strategy set to achieve that objective. One strand confirmed that the government’s economic strategy consisted of: “Supporting investment ... and borrowing, to deliver long-term growth and accelerate the transition to a climate resilient, nature positive and net zero economy.” In addition, the letter to the FPC highlighted that: “The financial stability outlook remains challenging. We are in a higher interest rate environment with heightened geopolitical and global risks, including climate change, which is the greatest long-term challenge that we face.”   

In her Mansion House Speech, the Chancellor also confirmed the co-launch, alongside the City of London Corporation, of the Transition Finance Council (TFC). The establishment of the TFC was one of the key recommendations arising from the Transition Finance Market Review and is viewed as essential for delivery of the Review’s recommendations, which set out how government could do more to accelerate the growth of the transition finance market. That report also highlighted McKinsey estimates that the global market opportunity for UK companies supporting the transition to a low carbon economy could be worth more than £1 trillion by 2030.   

The government’s Industrial Strategy 2035 green paper, published for consultation in October, highlighted clean energy industries as one of eight growth-driving sectors. Furthermore, an additional £50-£60bn of capital investment will be required each year through the late 2020s and 2030s to achieve the UK’s net zero ambition. The government believes that clean energy is the economic and industrial opportunity of the 21st century and that mobilising public and private finance will be critical.  

The government has clearly committed to decarbonisation, net zero and driving the UK towards becoming a clean energy superpower. It has also indicated it will consult in the first half of next year on how best to take forward the manifesto commitment on transition plans. Meeting the net zero target will require a significant amount of transition finance and also create opportunities for long-term investment in the UK economy. Developments in this space are likely to continue at pace and opportunities for UK based investments, across the risk and return spectrum, are likely to emerge. Some may well fall within the trustees’ requirements for their scheme’s investments. Trustees should review with their advisers and monitor emerging investment and fund opportunities.  

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The consultation sets out plans to regulate the provision of ESG ratings, where these assessments (or ratings) are used for investment decisions.

There was almost complete agreement to the introduction of regulation, with 95% of respondents in favour citing the need to address perceived harms in the ESG ratings market. 

The Chancellor confirmed last summer that the government would introduce legislation, and the requisite secondary legislation is now expected to go before Parliament in early 2025. Once the legislation is passed, the FCA will develop the standards and regulatory requirements that will need to be met by ESG ratings providers, and they expect to consult on their proposals in 2025. 

When the regulatory regime has been finalised, affected firms will go through an authorisation process, with the regime going live at the end of the authorisation gateway. Although the overall process is expected to take approximately four years, it is likely that developing regulatory expectations will filter through to the market before that. 

With the global ESG market predicted to exceed £30 trillion by 2030, the development of a regulatory regime for ESG ratings providers is a welcome development. This will, in time, increase transparency and trust in ESG ratings and increase market confidence in the reliability and quality of outputs. However, some existing ratings could change as the new requirements are rolled out. Trustees should review with their advisers and monitor developments with the market and ESG rating providers.  

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TCFD reporting: Moving beyond compliance

Trustees of master trusts will shortly be starting to work on their fourth TCFD report, where they will review their scenario analysis if they haven’t done so since their first TCFD report.  

To support trustees, we carried out a high-level review of TCFD reports already published by master trusts for year three.  

Our review showed:   

Physical risks: Many TCFD reports have previously focused on transition risks in the short to medium term and physical risks in the longer term but have done so in a combined and generic way. Some year three reports, reflecting increasing industry concerns that physical risks are underestimated, have started to focus more on physical risks, their potential impacts and their potential to arise in the short to medium term.   

Stranded assets: Generally, other than in the context of outline, generic narratives for qualitative scenarios, the potential for assets to be stranded and the impacts that might have doesn’t appear to be considered in the reports. Unlike many DB schemes, which have long-term liabilities but short-term scheme objectives (for example transfer to insurer), trustees of DC master trusts have long-term scheme (and member) objectives. We think more consideration could be given to stranded assets.   

Nature / biodiversity: Taskforce for Nature-related Financial Disclosure (TNFD) aligned reporting is developing but trustees, as yet, do not have any formal requirement to report on nature. However, the potential for nature and biodiversity risks to be financially material and the interconnection between nature and climate are increasingly being recognised. Some trustee boards have already identified nature as a key area of focus for either training, investment manager engagement or the trustees’ agenda for 2025. A few have gone even further and started to include some nature metrics in their reports.   

Transition plans: In our last bulletin, we highlighted the work of the Transition Plan Taskforce and the intention set out in the government’s manifesto to mandate transition plans for (some) pension funds. We haven’t seen any master trusts produce a transition plan yet, but we have seen an increasing trustee focus on ensuring, through their engagements with their investment managers, that companies they invest in are developing and putting in place credible transition plans.  

Repricing risk: Apart from some generic references in the context of scenario analysis, very few schemes have made reference to the potential for market re-rating of climate risk. A very limited number acknowledged that an intrinsic weakness in current scenarios (the failure to allow for tipping points) presented the potential for material repricing. We believe it would be useful for trustees to give further consideration to what the triggers for repricing might be, and what impacts that repricing might have across their scheme assets.   

Scenario analysis: A number of schemes haven’t done new scenario analysis since their first report, some have updated their scenario runs but haven’t updated the underlying scenarios, very few have used narrative scenarios, and some have just explained the underlying narrative to their current scenarios. However, many schemes have acknowledged the developing body of work around scenario analysis, and many have planned on revisiting their analysis and approach as part of next year’s report.   

Social Factors: A few schemes have introduced additional requirements in their fund manager agreements and engagements in relation to social initiatives and social factor stewardship priorities. Some expect their investments to have a strong social purpose, in line with their organisational ethos. Some have also sought to understand the impact of social factors on the behaviours of their DC savers.  

Just Transition: An increasing number of schemes have started to include reference to the need for a just transition. Around 50% of the schemes had either participated in the Just Transition Working Group, widened the focus of their engagements to include it, undertaken training, or identified it as stewardship priority for 2025 or as an area for greater focus in the future.   

Despite the industry challenges, pockets of better practice across a wider range of sustainability issues are developing as TFCD reporting evolves. It is clear that trustees of DC master trusts, with their long-term membership horizons, are starting to ask the ‘right’ questions and that the evolution of TCFD reporting can be a catalyst for wider sustainability-based reporting.

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Using apps to engage with pensions

More and more master trusts are rolling out pension apps, making pensions a part of everyday life. These apps have the potential to empower savers to track their savings and make informed decisions about their retirement. 

Anecdotal feedback received from our engagement with schemes suggests savers are more likely to look at their pension through an app, compared to using web services alone. In a community of relatively low engagement any innovation that improves this is commendable. The pensions sector is focused on good retirement outcomes, but they won't be achieved without helping savers to engage with their pensions and understand their options. What a pension app offers determines how useful it is.  

Key data, such as the level of contributions and pensionable pay data, are useful to savers. Savers can also find it useful to know what their fund is now and, through tools and modellers, whether they will have enough to meet their financial goals by the time they retire.  

Features that allow members to nominate beneficiaries and transfer in old pensions can also be helpful to create personalised experiences that work for everyone. Inclusivity is key, with some apps offering audio and video alternatives to cater for all users. 

Security is paramount.  

With the increasing threat of cyber risks, the security of pension apps is critical to maintain the trust and confidence of savers.  

While these apps can provide innovative ways to engage savers, it's essential to balance this with robust security policies to protect saver data and remain vigilant against threats.  

We will closely monitor how security measures evolve for pension apps. However, trustees should refer to TPR's Cyber Security Principles, which outlines steps they can take to protect savers from cyber risks.

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Good practice: updated data protection guidance

Data privacy is an ever-present concern in business. Demonstrating compliance with best practice in data protection can help reassure an organisation’s customers and stakeholders of its commitment to protecting their sensitive data.  

The Information Commissioners Office (ICO), which is the UK data privacy regulator, recently updated its data protection audit guidance. This provides a framework for large organisations to use to assess their compliance with best practice in data protection and data privacy law. 

The framework offers online toolkits to help identify best practice in a range of areas within data protection, including:  

• records management 
• information and cyber security 
• training and awareness 
• data sharing  
• personal data breach management  
• artificial intelligence 

 An audit tracker is included in each online toolkit to help organisations risk-assess their own procedures and legal compliance against relevant data protection law.  

We encourage you to review the ICO’s guidance and how this may inform your organisation’s approach to data privacy to ensure it remains robust and alert to new and emerging risks.

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The statement, published on the ICO website, follows discussions with firms and pension scheme providers sending communications to retail customers or savers who were concerned about breaching ICO Privacy and Electronic Communications Regulations (PECR). They specifically asked how communications, under the FCA’s Consumer Duty, and further to TPR’s code of practice and guidance, interact with direct marketing rules.  

The statement clarifies that provided messages are drafted in line with ICO’s guidance on direct marketing and regulatory communications, and do not contain direct marketing content, regulatory communications can be sent to customers or savers, even if they have opted out of direct marketing, not consented, or when no ‘soft opt-in’ is available. ‘Regulatory communications’ is defined under the ICO guidance and ‘direct marketing’ under the Data Protection Act 2018.  

The statement highlights that regulatory communications are crucial for helping savers make informed decisions, achieve financial goals, and avoid foreseeable harm. It clarifies that regulatory communications can be sent in a way that is both helpful to savers, while being compliant with data protection laws and direct marketing rules. 

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Our pensions dashboards surveys indicate that most schemes plan to connect according to DWP’s guidance – a vital, staged approach that supports smooth onboarding, mitigates capacity risks and enables schemes to take part in user testing. This will allow schemes to see how their systems and processes hold up within a live, yet controlled environment. 

You’ll have seen that we launched a dashboards campaign in October, where we encourage schemes to stay on top of their data preparations, emphasising our dashboards checklist as a helpful tool. We know that many schemes are finding the checklist useful to keep of track of their preparations. 

We also hosted a well-attended webinar last month, where industry experts, including a professional trustee, provided clarification and some useful insight on how schemes should prepare for their upcoming dashboard duties, with a focus on data. The webinar is now available on our website.  

On the topic of data, schemes should already have received an email from us on 15 October, which set out our expectations that schemes should measure and improve their data, and that failure to maintain complete and accurate records will put schemes at risk of not meeting their legal obligations. We are contacting those at risk of falling short of our expectations and they will need to demonstrate how they will meet them. For master trusts, we expect any discussion to be covered as part of the supervision framework. 

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EastEnders exposes pension scams in hard-hitting storyline

If you’re an EastEnders fan, you might have seen its pension scams storyline. 

Recent episodes feature ‘Jean Slater’ falling victim to a scam after being lured with promises of a ‘better return’ after participating in a free pension review. Viewers then follow the heart-breaking consequences for Jean as she comes to terms with losing her savings. 
 
Real-world insight drives storyline 

TPR which leads the Pension Scams Action Group (PSAG), worked with the show’s writers and researchers alongside other organisations to highlight scammers’ tactics and their victims’ emotional and financial struggles.  

Paul Sweeney, PSAG Business Lead, praised the storyline: "By showcasing Jean’s experience, EastEnders is raising awareness among millions. This could help viewers spot and avoid these scams in real life.”

Catch-up on BBC iPlayer 

The recent EastEnders storyline is not just compelling television, it’s a reminder of the real-world threat to pension savers. We recently launched a short film sharing the real-life story of Pauline Padden, who was one of 245 victims of a £13.5 million scam. Pauline has bravely shared her experience to warn others and the film is an important tool to share with your members to help protect them. 

Share Pauline’s story  
 
BBC Morning Live interview

In addition to working with the BBC on EastEnders, TPR and Pauline took part in the BBC’s Scam Safe Week roadshow which was broadcast live on BBC1 at the end of November.

Stay vigilant 

To support our ongoing work to raise awareness and combat scams, it’s crucial that master trusts maintain robust defences to protect savers from the very beginning. We recently produced a new ‘Steps to stay scam safe’ leaflet to share with members – which can be downloaded here.

Let’s work together to safeguard savers.

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Better decumulation options for savers

Trustees have helped savers build valuable DC benefits. Now, they must ensure these savings are effectively used in decumulation. 

While they cannot give financial advice, trustees should try to ensure that members seek appropriate advice on how to make the most of their savings in retirement.  

Decumulation is becoming an increasing area for innovation. The upcoming Pensions Bill, backed by the DWP, will only push this trend further with proposals on guided retirement solutions.  

TPR supports this move, emphasising principles for good decumulation, such as providing value for money, supporting member decision-making, and putting savers at the heart of decumulation strategies.  

The latest findings from the FCA Retirement Income market data survey (2023/24) offer valuable insights for trustees as they reassess their retirement offerings ahead of new legislation. Although the data comes from FCA-regulated firms, it provides a useful ‘retirement lens’ for trustees. 

The survey highlights that only 30.9% of plans accessed for the first time were accessed by plan holders who took regulated advice and around 10% of plan holders used Pension Wise. It shows that around 43% of plans were unadvised where drawdown was taken and that over 40% of plans were set up with a regular withdrawal rate of 8% or higher (and nearly 55% with a rate of 6% or more). While the research shows around 64% of all the plans accessed were under £30,000 in value, this lack of advice is a concern.  

Other survey findings confirm some relatively predictable trends, including: 

• The number of pension plans accessed for the first time increased, as did the overall value of money being withdrawn – as DC provision becomes the norm, more members will retire with DC benefits. 
• Sales of annuities increased by around 39%. In light of the increase in gilt yields over 2022 to 2023 and the consequent improvement in annuity rates, this was to be expected. 

In addition to the broad findings, some of the more insightful trends are revealed by the raw numbers. Of the 885,455 pension plans accessed for the first time: 

• more than 50% of all the plans were fully encashed
• around two thirds of plans with pot sizes less than £10,000 were fully encashed and more than two thirds of encashments were completed by plan holders in the age range 55 to 64
• just over 9% of plans were annuitised and around two thirds of those were taken by plan holders over the age of 65 

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Schroders and the Pensions Management Institute jointly produced the report, Lifetime Savings Initiative: A vision for success and self-sufficiency, with support from a panel of experts including TPR.  

Our Chief Executive Nausicaa Delfas said, with the government’s two-part pensions review and Bill, there’s a unique opportunity to look at how we can make the pensions system work for everyone.   

She said that the report builds on the success of automatic enrolment and added to the debate on the need to make sure all savers get value for money from their pensions.

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DC fund illustrations – a choice to make to avoid member confusion 

Trustees of eligible schemes must produce fund illustrations for two different purposes. These are:   

• statutory money purchase illustrations (SMPIs) for members’ annual benefit statements and pensions dashboards. Read the Financial Reporting Council’s publication: AS TM1: Statutory Money Purchase Illustrations. 
• to illustrate the cumulative effect of costs and charges on the value of a member’s pension pot over time, as part of the chair’s statement. Read DWP’s statutory guidance on reporting costs, charges and other information.  

AS TM1 specifies the actuarial assumptions and methods to use to calculate SMPIs and is revised from time to time. AS TM1 (version 5.1) was published in February 2024 and applies to statutory illustrations issued from 6 April 2024. Currently, paragraph 11 of DWP’s statutory guidance refers to trustees using the assumptions in AS TM1 (version 4.2), published in October 2016, and the FCA’s Conduct of Business Sourcebook (CoBS) as at 12 April 2021, to produce illustrations for the chair’s statement of the effects of costs and charges on the value of pension pots.  

The methods for deriving accumulation rate assumptions under AS TM1 version 5.1 and version 4.2 are very different. This may mean that:   

• there are significant changes to the accumulation rates for some funds.   
• some members may get projected fund value illustrations and estimated future pensions considerably higher or lower than the figures provided previously.  

Trustees may therefore be concerned about:  

• members being confused by receiving SMPIs prepared on a different basis (using AS TM1 version 5.1) to the illustrations in the chair’s statement (using AS TM1 version 4.2).   
• the impact on member behaviours from changing accumulation rates, caused by the changes introduced in AS TM1 version 5.1. Members may review their contributions (where the projected fund value and pension have significantly changed) and their choice of investment funds (where the accumulation rate of some funds have declined more than others).   

The DWP has confirmed that schemes can voluntarily use the most recent version of AS TM1 or CoBs, published by the FRC or the FCA respectively, appropriate to the period for which the illustrations in the chair’s statement are being prepared.  

Trustees should review the potential impacts on projected member outcomes, consider whether those impacts might affect member behaviours, and determine whether additional communications should be prepared.  

Paragraph 12 of the DWP’s statutory guidance indicates that when relevant assumptions in AS TM1 or in CoBs are updated, it intends to consult to maintain alignment with their guidance and has confirmed it expects to consult on changes to the statutory guidance in the future.  

Trustees should also note that:  

• The Financial Reporting Council launched a further consultation last month and is proposing to maintain the current standard following its annual review. Following the consultation it aims to publish the final AS TM1 by 15 February 2025, for application in the following financial year.   
• The FCA has revised the assumptions underlying CoBs, since the date (12 April 2021) referenced in the DWP guidance. The most recent changes took effect from 4 October 2024.  

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Index benchmarks: what lies beneath? 

Now in its 25th year, the UBS Global Investment Returns Yearbook 2024 highlights the composition of market indices varies over time.  

At the end of 1899, the UK equity market made up 24.2% of the global equity markets and the US equity market made up 14.5%. This compares to the start of 2024 when the UK equity market made up 3.7% of the global equity market, and the US equity market made up 60.5%.  

That publication also highlights the rise and fall of sectors. At the start of 1900, the railroad sector accounted for 63% of US stock market value and almost 50% in the UK. Today it is almost non-existent in those indices (though private market investment opportunities exist).   

More generally, some index changes happen a lot faster. Over the last 30 years the IT / Technology Sector has grown to make up nearly 30% of global indices. In the next 30 years, as the world decarbonises and clean energy becomes the norm, the composition of indices is likely to change rapidly. Industries will evolve and industries will decay as we adapt to and mitigate against the increasing impacts of climate change.   

In recent years there has been an explosion in the range of passive indices, particularly those in the climate, ESG and wider sustainability space. However, the dispersion of returns and risks across those indices is significant and trustees need to ensure they better understand the characteristics of any of these investments they hold.  

Trustees should be aware that the number of stocks and the stock, sector and country weightings in broad index categories can vary dramatically between the funds options available, as can the performance delivered over different time periods. For example, across the range of global funds offered by one provider, the number of stocks can vary from around 300 to over 3,000 and the weighting to the:  

• top 10 stocks can vary from around 2% to over 30%   
• information technology / communications and technology sectors can vary from around 10% to over 40%  
• US stock market can vary from below 50% to over 70%  

Performance over different time periods can similarly vary dramatically across that same global fund range, for example:  

• Over five years, the difference between the best performing index and the worst ranged from just over 12% per annum to under 5% per annum
• Over one year, the difference ranged between just under 23% to just over 13%  

The observations themselves are dramatic. However, a fair challenge would be to point to the potential for the global fund range to include some niche funds (which few pension funds would be minded to invest in), that past performance is no guarantee of future performance, and that the measurement period is also important. However, these challenges overlook the key point that the composition of indices varies. As the range of indices has expanded, the ability to compare one ‘apple’ with another variety of ‘apple’, as used to be the case, has blurred. The decision to capture market beta has become a lot more complex in practice.  

Trustees should review and ensure they fully understand the composition of their index benchmarks, the key drivers of return and risk within those benchmarks, and the significance of their index benchmark decisions.  

Together with their advisers, trustees should also consider whether the investment and risk performance reporting they currently receive, adequately highlights the sources of return and risk in the benchmarks they are tracking.  

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Systems and processes – significant events 

We expect all master trusts to engage with us in an open and co-operative way when notifying us of significant events linked to changes or failures in how schemes operate. 

We expect master trusts to consider whether any changes or failures relating to systems and processes should be notified to us as a significant event. These changes can be planned or unplanned and may happen over a short period of time, or over a number of years. 

We understand it can be difficult for trustees to decide whether changes or failures need to be notified to us. To help with this, we have provided some non-exhaustive examples of where we would expect to be notified: 

Significant event (j) is a failure of systems or processes which adversely affects the security or quality of data, or service delivery. You must notify us in writing of this event as soon as reasonably practicable. We consider this to mean within one working day of you becoming aware of the failure. 

Significant Event (j) examples include: 

• failure to process payments or transactions into and out of the scheme correctly. This should not be restricted to major failures but also to a series of less significant failures that may be indicative of systematic failures in processes 
• errors or failures in an agreed process (manual or automated). This could result in a cohort of members not receiving correct communications, or in other duties not being met within appropriate timescales. 

Significant event (k) is a significant change to the systems and processes used in running the scheme, or in any person responsible for delivering key services to the scheme. You must notify us in writing of this event as soon as reasonably practicable. We consider this to mean within five working days of you becoming aware of the significant change. 

Significant event (k) examples include: 

• change of scheme service provider such as scheme administrator or investment manager. 
• move to a new administration platform, or large-scale projects related to existing platforms which deliver technical transformation and/or process re-engineering. 

We have provided some other examples of potential significant events on our website. This list is illustrative rather than exhaustive.  

When a significant event occurs, you should prioritise notifying us even if you don’t have the complete information. If you are uncertain of whether you should submit a notification, you should contact your scheme supervisor at TPR. 

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Levy payments during wind-up 

We're reminding schemes that are pursuing continuity option 1 (bulk transfer and wind up), to consider levy payments in your wind-up budget.  

The key date for annual levy eligibility is 1 April as the levy is chargeable based on a scheme’s status as at that point. Where a scheme is wound up or becomes non-registrable, the effective date of this determines if the levy is payable or not. If the effective date of this event is before 1 April, then no further levy would be due for the financial year from 1 April, but where the effective date is after 1 April, the levy in relation to that complete financial year is payable. 

For further detail, please read our guidance on when levy must be paid.

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Consolidation – Business as Usual 

The pensions market is moving towards fewer, larger, well-run schemes. The master trust market, in particular, has seen consolidation activity grow in recent years.  

Where master trusts are consolidating, focus will often turn to the extensive work required for the consolidation. This means trustees may be less focussed on the legal requirements relating to day-to-day governance. Trustees should be clear that no regulatory obligations are paused during consolidation, others may be brought forward, and new obligations may be added.  

To support and remind consolidating master trusts we set out below a list of key documents which must be produced, published or provided to us. This list is not exhaustive and each master trust should consider its own position and the legislative requirements that apply to it at the relevant time:     

• A revised business plan needs to be produced and provided to us. This may be in line with a master trust’s cycle or, if there is a change that requires revision of the business plan, in accordance with legislation relating to the notification of significant events and guidance supporting this. We have discretion to notify a master trust if some of the information usually required in the business plan does not need to be produced. 
• The requirement to obtain audited accounts and an auditor’s statement remains during any consolidation period (certain schemes known as ‘ear-marked schemes’ are exempt from this requirement). 
• The continuity strategy and the scheme and scheme funder report and accounts need to be produced and provided to us in accordance with the master trust’s cycle. The supervisory return should be produced and provided to us where requested. Naturally, breach reporting must be produced and provided to us where necessary.  
• The TCFD report and implementation statement must be produced and published. Likewise, the chair statement should be produced and provided to us if required. 

Depending on the circumstances, we may request additional documents to ensure schemes continue to fulfil their regulatory obligations. We always encourage master trusts to communicate with us about their activities. 

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The importance of effective monitoring of contributions

A number of schemes have recently raised specific queries around monitoring contributions. The effective monitoring of contributions is a crucial tool to enable schemes to determine whether members are being paid the appropriate amount, and employers are deducting and paying at the expected contributions rate. 

Our codes of practice detail the obligations of pension schemes to effectively monitor the payment of contributions. Governing bodies should have a good understanding of these obligations and have a robust process to access pensionable pay data, which will enable assessment of whether amounts and percentages are correct. 

Employers should provide the necessary information to governing bodies so that contributions can be monitored at the same time as they are sent to the scheme. 

If the necessary payment information is not provided, and the governing body needs it to conduct effective risk-based monitoring, they should request the information they need from the employer. 

The employer should comply with the request within seven days so that the governing body is able to comply with its monitoring obligation. 

In relation to employers who are not providing contribution monitoring data, the scheme should report this as a breach of law within 28 days. This will then be reviewed by TPR accordingly.  

For schemes to fulfil their monitoring duties, they may consider it preferable to collect this information upfront. 

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New CDC pensions compliance and enforcement policy published  

We have published our new compliance and enforcement policy for collective defined contribution (CDC) pension schemes. It sets out our risk-based regulatory approach and how providers can expect us to supervise them.  

Under new powers, we can issue risk notices when we are concerned a CDC pension scheme is not being effectively run, governed or funded. 

We will use risk notices where we want to see trustees planning corrective action, which they must then deliver. A risk notice can be issued when we have concerns that a scheme is likely to breach its authorisation criteria. It can be used instead of, or in advance of, more serious powers, including de-authorisation.  

We support innovation in the market that benefits and protects savers, and believe CDCs offer trustees and employers a further option to provide members with a pension. We are excited about the government’s commitment to widening CDCs to multi-employer schemes. 

A CDC scheme must be authorised by us in order to operate. Once up and running it will be supervised by us, under five key operating principles, as outlined in the published guidance under ‘our expectations’.   

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