IPE UK Briefing: Regulations for multi-employer CDC pension funds

This month, the UK government laid regulations allowing for unconnected multi-employer collective defined contribution (CDC) pension funds. This was built on the progress made by the UK’s first CDC scheme, the Royal Mail Collective Pension Plan, which has over 100,000 members and reflects growing demand for pensions that deliver a lifelong income.

The new regulations will allow expansion of CDC to more employers and address greater demand from employees to receive a more secure income.

The government is also launching a consultation on ‘Retirement CDC’, which will allow people who have saved into a DC pension fund to transfer their pension pot into a CDC scheme at retirement.

This builds on reform already underway to create better pensions for tomorrow’s generation. This includes the Pension Schemes Bill, which could boost a worker’s pension by £29,000, and the revival of the Pensions Commission to ensure tomorrow’s pensioners are not poorer than today’s.

TPT Retirement Solutions is planning to launch a multi-employer CDC scheme earlier this year. This month, the UK-based provider appointed an all-female board of trustees for its multi-employer CDC scheme.

Speaking to IPE last month, Andy O’Regan, chief client strategy officer at TPT, said the firm expects to deliver the CDC scheme in 2027, which aligns with the multi-employer CDC regulations that were laid in parliament earlier this month. 

TPT has also announced its intention to launch a defined benefit (DB) superfund designed to run on rather than target buyout, after securing capital to support the first £1bn of transactions.

So far, Clara-Pensions is the only UK superfund assessed by TPR, with a buyout model. TPT’s planned run-on structure would broaden the range of options available to trustees and employers.

Regional growth drive

This month has also seen 20 of the UK’s largest pension providers and insurers back a regional growth drive initiative – ‘Sterling 20’ – established at the Regional Investment Summit in Birmingham.

The signatories, working with the government and City of London Corporation, are hoping to channel the nation’s savings into key infrastructure and fast-growing businesses in key modern industrial strategy sectors such as artificial intelligence (AI) and fintech.

The initiative was kick-started by investment from Legal & General (L&G) and NEST. L&G made a £2bn commitment to deliver 10,000 more affordable homes and create around 24,000 more jobs nationwide by 2030.

NEST, meanwhile, will provide Schroders Capital with £500m, of which £100m is expected to be channelled into UK investment in the coming years. NEST will also invest £40m to deliver gigabit-capable fibre broadcast to remote areas in Scotland and Northern England to deliver high-speed speed reliable broadband to rural homes and businesses in hard-to-reach communities.

Mansion House Compact progress

Sticking with growth drive, The Association of British Insurers’ Mansion House Compact update showed that the 11 signatories, which committed to allocate 5% of their DC default to unlisted equities by 2030, doubled their private market exposure in the last year to £1.6bn, out of a combined £268bn.

Phoenix looks to scale PRT business

In the pensions risk transfer (PRT) world, Phoenix Group has confirmed it is in talks with private capital firms over a potential partnership to accelerate the growth of its UK PRT business.

The insurer said it is in “initial discussions regarding a potential third-party partnership to accelerate the growth of its leading pension risk transfer business”. A spokesperson told IPE that talks are at an “early stage and there is no certainty that this will result in a transaction”.

Earlier this month, L&G completed the largest PRT deal of the year, a £4.6bn buy-in deal across two Ford Motor Company pension schemes.

Items to note:

• The IPE Conference & Awards 2025 is taking place on 4 December at the Palacio de Congresos de Sevilla in Spain.

Pamela Kokoszka

UK Correspondent