Open call for evidence

Automatic enrolment: alternative quality requirements for defined benefit, hybrid and collective defined contribution schemes being used as a workplace pension

Published 16 June 2026

Applies to England, Scotland and Wales

The call for evidence runs until 27 July 2026.

1. About this call for evidence

Who is this call for evidence aimed at?

The call for evidence is aimed at employers, employee representatives and pension industry professionals, including scheme administrators, actuaries, independent financial advisers and employee benefit consultants, and any other interested parties.

Purpose of the call for evidence

The Department for Work and Pensions (DWP) is required to carry out a statutory review of the operation of regulations made under section 23A(1) of the Pensions Act 2008.

Regulations made under section 23A(1) set out the alternative quality requirements for defined benefit (DB) pension schemes that are used for automatic enrolment. The requirements allow for simpler alternative tests to be used so that a scheme can demonstrate that it is of sufficient quality to be used by employers to fulfil their automatic enrolment duties. This call for evidence aims to ascertain whether the government’s policy objectives are being met, how the simplifications and flexibilities operate in practice, and whether any new issues have arisen since the last review in 2023.

DWP is also required to carry out a statutory review of the alternative quality requirements for defined contribution (DC) and collective defined contribution (CDC) schemes made under section 28(2)(b) of the Pensions Act 2008. To assist this review, this call for evidence also seeks views on the alternative quality requirement available to both single or connected employer and unconnected multiple employer CDC schemes as set out in regulation 32AE of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010.

Scope of the call for evidence

This call for evidence applies to England, Wales and Scotland.

Duration of the call for evidence

The call for evidence begins on 16 June and runs until 27 July 2026.

How to respond to this call for evidence

Email your response to: caxtonhouse.automaticenrolmentconsultation@dwp.gov.uk

When responding, please state whether you are doing so as an individual or as a representative of an organisation. If you are responding on behalf of an organisation, please make it clear who the organisation represents, and where applicable, how the views of members were canvassed.

Send any queries about the subject matter of this call for evidence to: caxtonhouse.automaticenrolmentconsultation@dwp.gov.uk

Government response

We will aim to publish the government response to this call for evidence on the GOV.UK website. The report will also set out the conclusions of the statutory reviews into the alternative quality requirements conducted by the department.  

2. How we consult

Consultation principles

This call for evidence is being conducted in line with the Cabinet Office consultation principles, which give clear guidance to government departments on conducting consultations.

Feedback on the consultation process

We value your feedback on how well we consult.  If you have any comments about the consultation process (as opposed to comments about the issues which are the subject of the call for evidence), including if you feel that the call for evidence does not adhere to the values expressed in the consultation principles or that the process could be improved, please address them to:

DWP Consultation Coordinator
2nd Floor
Caxton House
Tothill Street
London
SW1H 9NA

Email: caxtonhouse.legislation@dwp.gov.uk

Data Protection and Confidentiality

For this call for evidence, we may publish responses except for those where the respondent indicates that they are an individual acting in a private capacity (e.g. a member of the public). We will remove email addresses and telephone numbers from published responses.

For more information about what we do with personal data, you can read DWP’s Personal Information Charter. 

3. Alternative quality requirements for DB, hybrid and CDC schemes

Why are we carrying out a review now?

The Secretary of State is under a statutory duty to review the regulations made under the powers in section 23A(1) of the Pensions Act 2008, which introduced the alternative quality requirements for UK defined benefit schemes. These reviews must take place at no more than three-yearly intervals^{[footnote 1]} and the last review took place in 2023.

CDC schemes were introduced by the Pension Schemes Act 2021 and the legislative framework for single and connected employer CDC schemes came into effect on 1st August 2022. Under that framework, employers who choose to use a CDC scheme to meet their AE duties are required, as with other schemes, to ensure that the scheme meets the minimum quality requirements for qualifying schemes under the Pensions Act 2008. Schemes that provide collective money purchase benefits (CDC Schemes) can alternatively elect to satisfy one of two alternative tests, which are both detailed below. The legislative framework for multiple and unconnected employer CDC schemes is due to come into effect from 31 July 2026.^{[footnote 2]}

The Secretary of State is under a statutory duty to undertake a comparative review in respect of these tests every three years under section 28(2C) of the Pensions Act 2008. Therefore, it is appropriate to continue reviewing the alternative quality tests for all scheme types, syncing the review cycles.

This Call for Evidence aims to gather evidence that will help the Secretary of State assess whether the regulations are operating as intended, including identifying any unintended consequences, and to what degree the provisions are continuing to deliver simplifications and efficiencies for employers and pension schemes.

Background (defined benefit and hybrid schemes)

Automatic Enrolment into workplace pensions was introduced in 2012 to enable more people to save for their retirement and to make saving the norm for most people in work. The law requires employers to enrol all their eligible workers^{[footnote 3]} into a qualifying workplace pension scheme and pay pension contributions.

Employers who choose to use a defined benefit or hybrid pension scheme to meet their automatic enrolment duties must ensure their scheme meets the minimum quality requirements^{[footnote 4]} set out in the Pensions Act 2008 and the accompanying secondary legislation.^{[footnote 5]}

The framework for alternative quality requirement tests for defined benefit or hybrid schemes was introduced through the Pensions Act 2014 (which inserted section 23A into the 2008 Pensions Act). Details of the alternative quality requirement tests are set out in regulations (made under section 23A(1)). The policy objective behind the alternative quality requirement tests is to provide a simpler mechanism for employers and their advisers to determine if defined benefit or hybrid schemes meet the quality requirements for automatic enrolment, compared to meeting the test scheme standards (TSS) provided for in legislation and statutory guidance.^{[footnote 6]} The ‘test scheme’ is a hypothetical defined benefit scheme and, in simple terms, a scheme satisfies the TSS if it provides pension benefits broadly equivalent to those of the ‘test scheme’. The TSS remains an option for employers.

However, the alternative quality requirement tests are of particular help to employers with formerly contracted-out schemes (which from April 2016 onwards would otherwise have needed to ensure that their schemes met the TSS).

The current alternative quality requirements

Since 1 April 2015, there have been two alternative tests available for defined benefit schemes or hybrid schemes to ensure that they are meeting their automatic enrolment duties:

• test one – a test^{[footnote 7]} enabling schemes, which meet prescribed requirements, to use the money purchase quality requirements – based on meeting the existing quality requirements for defined contribution schemes, i.e. a minimum contribution equivalent to 8% of qualifying earnings (Section 20 of the Pensions Act 2008)

• test two – a ‘cost of accruals’ test^{[footnote 8]} – based on the cost to the scheme of the future accrual of active member benefits

Test one

This is a test enabling schemes which meet prescribed requirements to use the money purchase quality requirements.

In response to feedback from a public consultation in 2014, a test was introduced whereby a defined benefit scheme will be able to use the money purchase quality requirement for defined contribution schemes (Section 20, Pensions Act 2008).

To determine whether the scheme may apply this test, there are a number of conditions that must be satisfied:

(a) members’ benefits are calculated by reference to factors which include the contributions made to the scheme by, or on behalf of, the member;

(b) the contributions in sub-paragraph (a) are converted, in accordance with scheme rules, as soon as reasonably practicable and no later than a month after receipt, into a right to an income for life;

(c) the benefits payable to the member under the scheme become payable no later than the member’s State Pension Age;

(d) following the conversion of the benefits in sub-paragraph (a), the amount of the members’ benefits cannot be reduced unless this is at the member’s request;

(e) following any actuarial valuation, the trustees or managers have absolute discretion to use any excess funds to increase members’ benefits; and

(f) where benefits have been increased using the excess assets referred to in (e), they cannot be reduced except at the member’s request.

Test two

This is the cost of accruals test. The cost of accruals test is based on the cost to the scheme of the future accrual of active member benefits. The test is normally applied at scheme-level and, broadly speaking, a defined benefit scheme (or defined benefit elements of a hybrid scheme) meets the quality requirement for automatic enrolment if “the cost of providing the benefits accruing for, or in respect of, the relevant members over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the members’ total relevant earnings over that period”. In other words, the cost of providing benefits would at least require the minimum levels of contribution rates prescribed in legislation.

Prescribed percentages in relation to members’ earnings are set at a level that broadly represents the cost of providing the benefits under the TSS. To maintain the existing quality standards for schemes, section 23A of the Act provides that the percentage prescribed in regulations cannot be below the 8% total contribution rate required for a qualifying defined contribution scheme.

The cost of accruals test generally applies at a scheme-level. However, where there is material difference in the cost of providing benefits for different groups, the test is applied at a benefit scale level.

The CDC Test

Employers who choose to use a CDC scheme to meet their AE duties are required, as with other schemes, to ensure that the scheme meets the minimum quality requirements for qualifying schemes under the Pensions Act 2008. Unconnected multiple employer CDC schemes will be permitted to satisfy either the “DC Test” or the “alternative CDC test”. These are set out below.

Single or connected employer CDC schemes are only permitted to satisfy the “alternative CDC test”.

Test One: the alternative ‘DC test’.^{[footnote 9]} This ‘test’ looks at the proportion of jobholders in different sets^{[footnote 10]} for whom total contributions are at least as much as under minimum contributions on qualifying earnings. This statutory review is carried out by DWP analysts.

Test two: An alternative ‘cost of accruals’ test^{[footnote 11]} – The Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 introduced an alternative AE quality test for collective money purchase schemes. The test, taking all relevant jobholders together, looks at monetary contributions by, or on behalf of, or in respect of those jobholders over the certification period, and these are assessed against prescribed percentages of their total relevant earnings over that period. DWP intends that the test will be applied to all relevant jobholders together, unless there is a material difference in the cost of providing rights to benefits to different groups (as set out in the CDC regulations).

This alternative quality requirement for CDC schemes will operate alongside the valuation requirements in the CDC regulations.

The 2023 Review

The 2023 Review investigated, through a series of questions in the call for evidence, if the alternative tests were continuing to deliver, in broad terms, a simplified mechanism for demonstrating a pension scheme met the quality requirements. The responses from the call for evidence showed that the alternative quality requirements continue to provide a simplified option to comply with the automatic enrolment scheme quality requirements for the majority of DB and hybrid schemes who use them. The 2023 Review also concluded that the CDC test remains sufficient, and the policy objective continues to be met.

A minority of respondents did suggest a carve out exemption for legacy DB schemes with 1 to 2 active members from the Cost of Accruals test, as the statutory minimum being met for at least 90% of jobholders could be a hard threshold to meet. In addition, respondents noted issues surrounding the definition of pensionable pay used by some schemes. These schemes may potentially face difficulties in applying one of the five available definitions of pay within the alternative tests to their circumstances. DWP acknowledged this concern, however it was the view of DWP that most DB and hybrid schemes using the Cost of Accruals test can use the existing definitions of pensionable pay. DWP’s position was that making further bespoke arrangements for particular schemes risks obscuring what is meant to be a broad simplified test. In these cases, the TSS is likely to be the more appropriate test.

Another issue raised in the 2023 and 2020 Reviews was questions around the definition of ‘relevant members’ under the cost of accruals test, particularly if members had opted down but still received benefits from another qualifying scheme for the same employer. The legislative definition of ‘relevant members’ does not allow employers to exclude members who have ‘opted-down’, to make contributions below the qualifying rate, from their cost of accruals assessment as this creates a possible risk that a scheme fails to meet the cost of accruals test. As above, DWP’s position remains that we wish to avoid adding further layers of complexity to the alternative tests, as the TSS is intended for those circumstances where definitions of earnings and calculations of contribution rates remain complex. 

Overall, respondents felt that the alternative quality requirements do continue to deliver the intended simplifications to the automatic enrolment testing regime. Respondents were also content with the Cost of Accruals test as this provides a simpler version of the TSS in the Pensions Act 2008.

4. Questions

We are seeking evidence and views on the operation of the alternative quality requirements for defined benefit, hybrid and CDC schemes.

Public Sector Equality Duty

The Public Sector Equality Duty contained in Section 149 of the Equality Act 2010 states that a public authority must, in the exercise of its functions, have due regard to the need to:

a. eliminate discrimination, harassment, victimisation and any other conduct
    that is prohibited by or under the Act.

b. advance equality of opportunity between persons who share a relevant
    protected characteristic and persons who do not share it.

 c. foster good relations between persons who share a relevant protected
     characteristic.

An equality analysis will be considered as part of the review and respondents should note that evidence on the operation of the tests in respect of scheme members with different protected characteristics can be submitted in response to Question 3.

Question 1

Do the alternative quality requirements for defined benefit and hybrid schemes still deliver simplification and flexibility for sponsoring employers and pension schemes that are unable to use the TSS?

Where possible, please provide information on the frequency of use and circumstances where schemes revert to using the TSS.

Question 2

In practice, who is carrying out the tests and signs off certification: the employer (i.e. self-certification) or its professional advisers?

Where possible, please provide information on cost/time to certify and what governance/assurance is used.

Question 3

Are there any issues or considerations that sponsoring employers or pension schemes would like to bring to DWP’s attention regarding the operation of the alternative quality requirements?

Please describe any issues that have arisen to date, as well as any issues you anticipate may arise in the future. Where possible, indicate the frequency and scale of these issues, and set out any suggested solutions or mitigations.

Question 4 (applicable only to CDC schemes)

Do the alternative quality requirements for CDC schemes remain appropriate for single and connected employers?

For new unconnected multi-employer CDC schemes, are the proposed alternative quality requirements appropriate?

5. Glossary

Term	Definition
Hybrid schemes	Hybrid schemes are defined, for the purposes of automatic enrolment only, as schemes that are neither money purchase nor defined benefits.[footnote 12] They generally have elements of both types of benefits, and depending on the type of scheme involved (see table 1), they may need to satisfy a combination of the defined benefits quality requirement (including the alternative quality requirements prescribed under Pensions Act 2008 section 23A) and the money purchase quality requirement, or they may only need to satisfy either of the requirements.[footnote 13]
Contracting out	Under the old State Pension legislation, up to 5 April 2016, individuals were able to ‘contract out’ of the Additional State Pension.[footnote 14] This meant that workers and employer could pay less NI contributions into the state system. It was not possible to contract out of the basic State Pension. Individuals could only opt out (‘contract out’) of the Additional State Pension if they were part of a private pension – such as a workplace or personal pension scheme – that could be built up to replace the State Pension. The new State Pension has replaced the existing basic and Additional State Pension, ending contracting out from 6 April 2016.[footnote 15]
Terms in the ‘cost of accruals’ test[footnote 16]	Under the test, a defined benefits scheme (or defined benefits element of a hybrid scheme) is a qualifying scheme, if the cost of providing benefits accruing for or in respect of the relevant members over a relevant period would require contributions to be made of a total amount equal to at least a prescribed percentage of the member’s total relevant earnings.
Relevant members	Relevant members for the purposes of the cost of accrual test are the active members of the scheme of which the jobholder is a member. However, where there is or was a material difference in the cost of providing the benefits accruing for different groups of relevant members over the relevant period, then (subject to the transitional arrangement) the testing is carried out separately for each sub-group (i.e. benefit scale). The actuary, having considered a range of factors, will determine whether there is a material difference in cost.[footnote 17]
Relevant period	The relevant period is the period over which the cost of providing the accruing benefits is estimated. The period is normally to be taken from the most recent written report signed by the actuary, containing information about the cost of future benefit accrual by reference to a period which begins later than the date report takes effect.[footnote 18]
Relevant earnings	The relevant earnings are the earnings which the scheme uses to determine pensionable earnings, provided that they are at least equal to or more than the earnings calculated using one or more of the definitions set out in the table below, for all of the relevant members. To ensure that the cost of providing benefits, under the alternative quality requirements, is broadly equivalent to the cost of similar benefits, under the test scheme standard, the earnings definitions have a corresponding prescribed percentage (see table below) contribution rate.[footnote 19]

Table 1: Earnings definition and corresponding minimum contribution rate^{[footnote 20]}

Legislative definitions: Relevant earnings must be at least equal to or more than:	Prescribed percentage of relevant earnings: Survivors’ pension benefits provided by scheme	Prescribed percentage of relevant earnings: Survivors pension benefits not provided by scheme
Qualifying earnings	10%	9%
Basic pay	11%	10%
Basic pay and, taking all of the relevant members together, the pensionable earnings of those members constitute at least 85% of the earnings of those members in the relevant period	10%	9%
Earnings	9%	8%
Basic pay above the single person’s basic State Pension or the Lower Earnings Limit	13%	12%

1. Section 23A(7) Pensions Act 2008 ↩

2. SI 2025 - Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 - Statutory Instruments - UK Parliament ↩

3. Aged between 22 and State Pension age, earning over £10,000: Section 3(1) Pensions Act 2008. ↩

4. In Sections 21 to 23 of the Pensions Act 2008 ↩

5. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 ↩

6. Automatic enrolment: Guidance for employers on certifying defined benefit and hybrid schemes ↩

7. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32L ↩

8. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32M ↩

9. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32E ↩

10. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32E: paragraphs 2-7 ↩

11. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32EA ↩

12. Section 99, Pensions Act 2008 ↩

13. Section 24, Pensions Act 2008 ↩

14. Schedule 4B. 3, Social Security (Contributions and Benefits) Act 1992 ↩

15. Pensions Act 2014 ↩

16. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32M ↩

17. The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32M ↩

18. Section 23A(2) Pensions Act 2008 ↩

19. Section 23A(2) Pensions Act 2008 ↩

20. Section 23A(1)(b) Pensions Act 2008: The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 Section 32M ↩