TPT Retirement Solutions is targeting the launch of its multi-employer collective defined contribution (CDC) scheme with around 12,000 to 14,000 members, significantly above the 5,000-member level it had initially expected to need to establish the fund.
The pension provider said it expects to submit its application for authorisation to the Pensions Regulator (TPR) in the coming weeks, with an internal target of launching the scheme around mid-2027, subject to regulatory approval.
Paul Eagles, head of CDC at TPT, said the provider had initially been targeting around 5,000 members for launch, although the regulatory framework suggested a scheme could potentially be established with around 1,500 members.
“[We’re] probably up to about 12,000 to 14,000 in terms of employees that are wanting to move”, Eagles said, adding that it is “way above where we expect it to be”.
The figures reflect interest from employers that TPT expects could move members into its multi-employer CDC arrangement, rather than confirmed membership on day one.
TPT plans to stagger the entry of employers during the first year of the scheme rather than bring all interested employers in simultaneously.
Andy O’Regan, chief client strategy officer at TPT, said the provider was already discussing how prospective sponsors could be grouped for entry.
Factors including the level of interest, board sign-off, employee numbers and the consistency of member data could determine when individual employers join.
“We won’t be able to put all of our interested employers in on day one because of the timing,” O’Regan said. “So, we’re going to be staggering, bringing them in through that first year of launch.”
Authorisation
TPT has been developing its CDC proposition for around three years. The plans follow the introduction of regulations allowing multi-employer CDC schemes to operate, with the legislation coming into force on 31 July and TPR releasing application forms and guidance on 3 August.
Once submitted, the authorisation process can take up to six months. O’Regan said TPT was therefore working towards a 2027 launch.
“We say to prospects: authorisation submission is 26 and launch in 27,” he added.
The provider said demand was not expected to be a barrier to launch. It is already receiving detailed plans from employers about moving their DC membership into the CDC arrangement, with some engaging as much as 12 months ahead of the expected launch.
Employer interest
TPT said interest was coming from both existing clients and employers that do not currently use its services. Eagles said the provider held discussions with hundreds of employers, with only a small number indicating that CDC was not suitable for them.
Interest has been identified across sectors including housing, charities, independent schools and building societies.
TPT expects demand to increase once the first multi-employer CDC scheme is operational.
Eagles said: “I think we’re expecting it to be a bit of a snowball effect.”
Moving DC members into CDC
A key element of TPT’s proposition will be the ability to transfer members’ existing DC pots into the CDC arrangement.
Under the approach being considered, active members would be notified that their DC pot would be transferred and given the option to opt out, rather than having to actively opt in.
TPT’s CDC proposition is designed as a whole-of-life arrangement, with members accumulating a target pension rather than an individual pot. Contributions would be pooled and invested collectively, with target pensions adjusted through annual actuarial valuations.
TPT expects CDC to offer higher expected retirement outcomes than conventional DC, while acknowledging that benefits are targets rather than guarantees. For employers, the attraction is the prospect of higher expected retirement incomes without increased contributions or the open-ended funding risk associated with defined benefit.
