Ahead of its closure tomorrow, the Society of Pension Professionals (SPP) has today (Monday 18th November 2024) published its response to the current DWP consultation on draft legislation for Collective Defined Contribution (CDC) pension schemes.
The SPP have backed the bulk of the proposed regulations but have warned that in some areas, “…the proposed regulations may be unduly onerous and could inadvertently constrain activity in this area…”
Issues of concern to the SPP include the definition of ‘promotion and marketing’ activities that trustees are prohibited from taking part in, which the SPP consultation response states is, “…very broad and could plausibly constrain communications with current or prospective employers that largely form part of good governance of the scheme by trustees.”
The response also highlights the potential risk that schemes could at some point in the future inadvertently transition between the connected and unconnected employer regimes and that this would pose significant difficulties in practice.
Furthermore, the SPP questions, “…whether the proposed constraints on changes in investment strategy, with the associated requirement to sectionalise, meet the desired legislative intention.”
In total, the SPP have made 9 recommendations to improve the legislation.
Edd Collins, Chair of the SPP CDC Group, said; “The SPP broadly welcomes what’s being proposed. We hope that our recommendations relating to some of the areas of concern are taken on board and that these help improve the legislation. Ultimately, we all share the same ambition to make sure as many savers as possible can take advantage of the numerous benefits of CDC pension schemes.”
The SPP response can be read in full here: https://the-spp.co.uk/wp-content/uploads/SPP-CDC-Consultation-Response-FINAL-18.11.24.pdf?v=6547
