Policy paper

Explanatory Memorandum to The Pensions Regulator Code of Practice: Authorisation and Supervision of Collective Defined Contribution Schemes 2026

Published 29 April 2026

© Crown copyright 2026

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This publication is available at https://www.gov.uk/government/publications/explanatory-memorandum-to-the-pensions-regulator-code-of-practice-29-april-2026/explanatory-memorandum-to-the-pensions-regulator-code-of-practice-authorisation-and-supervision-of-collective-defined-contribution-schemes-2026

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1. Introduction 

1.1 This Explanatory Memorandum has been prepared by the Department for Work and Pensions and is laid before Parliament by Command of His Majesty.  

2. Declaration  

2.1 Torsten Bell, Minister for Pensions at the Department for Work and Pensions and His Majesty’s Treasury confirms that this Explanatory Memorandum meets the required standard. 

2.2 Simon Boniwell, Deputy Director for Pensions Innovation and Guidance at the Department for Work and Pensions confirms that this Explanatory Memorandum meets the required standard. 

3. Contact 

3.1 Thomas Rhodes at the Department for Work and Pensions, email: thomas.rhodes@dwp.gov.uk and Telephone: 0300 082 6086 can be contacted with any queries regarding this instrument.  

Part One: Explanation, and context, of the Instrument

4. Overview of the Instrument

What does the legislation do?

4.1 The Pensions Regulator’s[footnote 1] draft Code of Practice: “Authorisation and supervision of collective defined contribution schemes” sets out the process collective money purchase schemes (a type of trust-based occupational pension scheme) must follow to apply to The Pensions Regulator for authorisation. It also sets out the matters The Pensions Regulator expects to take into account in fulfilling its functions regarding the authorisation and ongoing supervision of collective money purchase schemes.

4.2 The draft Code of Practice replaces the current Code of Practice: “Authorisation and supervision of collective defined contribution schemes”.

Where does the legislation extend to, and apply?

4.3 The extent of this instrument (that is, the jurisdiction(s) which the instrument forms part of the law of) is Great Britain.

4.4 The territorial application of this instrument (that is, where the instrument produces a practical effect) is Great Britain.

4.5 The draft Code of Practice will be updated to include references to corresponding legislation in Northern Ireland when this is brought into force.

5. Policy Context

What is being done and why?

5.1 The Pensions Regulator issued a Code of Practice for collective money purchase schemes on 1 August 2022[footnote 2]. It related to the authorisation and supervision of collective money purchase schemes, which were introduced by the Pension Schemes Act 2021[footnote 3] and The Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022[footnote 4], and it set out the framework for an authorisation and supervision regime for collective money purchase schemes.

5.2 The publication of a Code of Practice is a statutory requirement. The purpose of a Code of Practice is to set out clearly how an application for authorisation must be made and how The Pensions Regulator will assess the matters that the regulations require it to take into account when deciding whether it is satisfied that a scheme meets the criteria for authorisation. It helps those involved in collective money purchase schemes to understand how to satisfy The Pensions Regulator that the authorisation criteria are met at application and continue to be met throughout supervision.

5.3 The current Code of Practice makes clear that it must be read in conjunction with the Pension Schemes Act 2021 and The Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022, which introduced the authorisation and supervision regime for collective money purchase schemes.

5.4 When the current Code of Practice was published, only single or connected employer collective money purchase schemes were permitted to apply for authorisation to operate. Single or connected schemes are those with a single employer, or two or more employers that are financially connected.

5.5 Since the publication of the current Code of Practice, the provision of collective money purchase schemes has been extended by the Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025[footnote 5] to include unconnected multiple employer collective money purchase schemes. These regulations amended the Pension Schemes Act 2021, so that unconnected multiple employer collective money purchase schemes can operate.

5.6 An unconnected multiple employer collective money purchase scheme refers to a pension scheme used (or intended to be used) by multiple employers, some or all of which are unconnected with each other and where all contribute to a single pooled fund within the scheme. The regulations allow companies from different industries to offer their employees a collective money purchase pension through a shared structure, despite not being directly connected to one another.

5.7 The Pensions Regulator will be responsible for administering the authorisation and supervision regime for unconnected multiple employer collective money purchase schemes. The Pensions Regulator has made necessary amendments to the current Code of Practice in the new draft Code of Practice which replaces it. The draft Code of Practice sets out the detail of the procedures it expects to follow, and detailed information and guidance on how it will assess the matters that the regulations require it to take into account when deciding whether or not it is satisfied that the criteria are met to grant authorisation or to continue to authorise a scheme.

What was the previous policy, how is this different?

5.8 The content of the current Code of Practice – as detailed in paragraphs 5.2 to 5.4 of this document – has been amended so that the new draft Code of Practice that replaces it now includes:

  • the process unconnected multiple employer collective money purchase scheme trustees must follow to apply for authorisation; and
  • the matters The Pensions Regulator expects to take into account in deciding whether they are satisfied that an unconnected multiple employer collective money purchase scheme meets the authorisation criteria at the point of application and then on an ongoing basis

How has the law changed?

6.1 Section 90 of the Pensions Act 2004[footnote 6] gives The Pensions Regulator the power to issue Codes of Practice. Paragraph 13 of Schedule 3 to the Pension Schemes Act 2021 amended section 90(2) of the Pensions Act 2004. It introduces a requirement for The Pensions Regulator to issue a Code of Practice in relation to the process for making an application under Part 1 of the Pension Schemes Act 2021 for authorisation of a collective money purchase scheme, as well as the matters The Pensions Regulator expects to take into account when deciding whether it is satisfied the authorisation criteria are met. Part 1 of the Pension Schemes Act 2021 has been amended to allow unconnected multiple employer collective money purchase schemes to apply for authorisation.

6.2 The draft Code of Practice is not a statement of law, and it is not necessary for all provisions of the draft Code of Practice to be followed in every circumstance. However, any alternative approach to that appearing in the draft Code of Practice will nevertheless need to meet the underlying legal requirements. When determining whether the legal requirements have been met, a court or tribunal must take any relevant provisions of the Code of Practice into account under section 90(5) of the Pensions Act 2004.

Why was this approach taken to change the law?

6.3 This approach was taken to update the Code of Practice to reflect the extension of the authorisation regime.

7. Consultation

Summary of consultation outcome and methodology

7.1 The Pensions Regulator consulted on its draft Code of Practice between 19 December 2025 and 13 February 2026[footnote 7]. The consultation was principally aimed at anyone to whom the collective money purchase legislation applies. This includes employers, trustees, and professional advisers such as actuaries and service providers. The consultation received 29 responses.

7.2 Most of the responses to the consultation found the draft Code of Practice helpful in developing their understanding of the authorisation and supervision regime for unconnected multiple employer collective money purchase schemes.

7.3 The common themes that came from the responses included areas of clarification on promotion or marketing, systems and processes compliance for new schemes, consequences of sectionalisation (including how the investment strategy may trigger this), and whether the draft Code of Practice adequately deals with collective money purchase sections of authorised Master Trusts[footnote 8].

7.4 There were also areas where the responses have enabled The Pensions Regulator to make changes to provide additional clarity on what schemes will be required to provide, as part of the application for authorisation process and how The Pensions Regulator will take matters set out in The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 into account when assessing both an application for authorisation and then, if authorised, a scheme on an ongoing basis.

8. Applicable Guidance

8.1 The Pensions Regulator intends to provide supporting guidance with the draft Code of Practice when it comes into effect. This will include guidance on promotion or marketing, assessment of IT systems, and further detail on the calculation of authorisation fees.

Part Two: Impact and the Better Regulation Framework

9. Impact Assessment

9.1 A full impact assessment of The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 has been published on the legislation.gov.uk website[footnote 9]. A separate impact assessment has not been prepared for this Code of Practice.

Impact on businesses, charities and voluntary bodies

9.2 The impact on business, charities or voluntary bodies is minimal because the Code of Practice provides procedural guidance to prospective and authorised collective money purchase schemes rather than imposing new regulatory requirements. The main impact will be on persons seeking to establish and operate an unconnected multiple employer collective money purchase scheme; persons who choose to apply to The Pensions Regulator for authorisation of such a scheme; and persons who operate an unconnected multiple employer collective money purchase scheme following authorisation.

9.3 The legislation does not impact small or micro businesses.

9.4 There is no, or no significant, impact on the public sector because collective money purchase provision is restricted to private pensions.

10. Monitoring and review

What is the approach to monitoring and reviewing this legislation?

10.1 The approach to monitoring this legislation is that The Pensions Regulator will monitor the extent to which the draft Code of Practice provides the information collective money purchase schemes need to allow them to apply for authorisation, to operate and to continue to be authorised on an ongoing basis.

10.2 The instrument does not include statutory review clause.

Part Three: Statements and Matters of Particular Interest to Parliament

11. Matters of special interest to Parliament

11.1 None

12. European Convention on Human Rights

12.1 As the Code has no effect on existing legislation, no statement is required.

13. The Relevant European Union Acts

13.1 This instrument is not made under the European Union (Withdrawal) Act 2018, the European Union (Future Relationship) Act 2020 or the Retained EU Law (Revocation and Reform) Act 2023 (“relevant European Union Acts”)

  1. The Pensions Regulator – what we do and who we are ↩

  2. Collective defined contribution (CDC) ↩

  3. Pension Schemes Act 2021 ↩

  4. The Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022 ↩

  5. The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 ↩

  6. Pensions Act 2004 ↩

  7. Extending the collective defined contribution code of practice consultation ↩

  8. A master trust is a trust-based occupational pension scheme designed for multiple, unconnected employers, providing a single consolidated structure for defined contribution (DC) benefits. ↩

  9. The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 ↩

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