In summary

This document has been created by the various stakeholders committed to helping collective pensions to be successful. These include member representatives, advisers, sponsors, Proprietors and potential trustees of CDC schemes (of which Pension Mutual is one). Unanimously we are agreed that transfers are imperative for all stakeholders. In summary we believe that potential proprietors are struggling to finalise their business plans without certainty that their CDC scheme would be properly supported by transfers in of members’ existing DC pots.

We call on the DWP and TPR to make it clear to DC providers and their trustees that there should be straightforward transfer between DC arrangements and CDC schemes.

What we will focus on is

• Ad hoc, individual transfers made with the consent of members of the CDC scheme
• Bulk transfers requested by employers with Trustee agreement. These transfers involve CDC scheme members who have not directly consented, but who have pots in the employer’s former workplace pension.
• Bulk transfers for members of DC schemes which are winding up and which have paid up pots for DC members who need a new scheme. These are not requested by employees but by ceding trustees who are exercising their duty to members.
• Tranches of consented transfers treated as bulk transfers – the consultation issued by the employer to staff may prompt many transfers to the new CDC arrangement – we see these being passed in tranches from the ceding DC scheme to the CDC scheme. These tranches will be a half-way house between ad hoc individual transfer and non-consented bulk transfers. They will be consented but enjoying the transition efficiency of a bulk transaction
• Who benefits from the transfer? Explaining the benefits of consolidation to the key stakeholders of the CDC scheme. We need to have clarification from TPR on how transfers can be promoted and by whom, noting that transfers from other occupational pension schemes would fall out with s21 of the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 whereas transfers from FCA regulated products would be caught. What are the risks of blocked transfers this may be from the ceding trustee or commercial provider. It could arise from inaccurate requests from the employer or members who have left employment before set-up
• The philosophical objections of fiduciaries of ceding schemes. We hope these will be explored, recognised and dealt with by guidance from TPR.
• What needs to change for risks to be minimised – these are our asks to DWP and TPR to speed up the transfer process from ceding DC to receiving CDC scheme.

Ad hoc, individual transfers (with consent)

CDC or “collective pensions” operate like DC when it comes to contributions but subsequently is quite different in what it offers a member. We recognise that members who look to transfer from DC to CDC are radically changing their plan. They will hope to have more income; in return they give up choices (eg investment choices) and freedom to spend their money (although this latter choice can still be satisfied through taking a subsequent CETV from the CDC scheme),..

We expect that, encouraged by the Pensions Dashboard which displays income before pensions, many people who have become members of a CDC scheme will consolidate with the target being income and not wealth. These people may transfer pots from the workplace DC scheme they have recently left and other DC “pots” in other schemes and GPPs.

Pension Mutual will encourage this consolidation in two ways. It will work with employers, advisers and unions to explain the difference between pots and pensions. Secondly, while we will not advise people what to do, we will give them tools which will help them work out which type of pension they might prefer.

If members then choose to instruct a transfer of pot to pension, we will ask for a simple instruction to be signed, preferably using Origo’s common declaration. Where Origo cannot be used we will forward the request to the ceding trustee of a DC occupational scheme or provider of a personal pension contract.  The most usual transfer is expected to be from the scheme that the individual is leaving to join the Pensions Mutual collective pension.

We hope that other pots showing on the member’s dashboard will also be transferred. Pensions Mutual’s administrators will assist in liaising with transfers to CDC that may be for the first time.

We would expect the member’s request to be honoured without fuss by the ceding DC scheme and that it’s made clear by TPR and FCA to DC providers and trustees that it will only be in unusual circumstances that transfers will be blocked.

Bulk transfers (without consent) for active CDC members who have not opted to transfer but have pots in the previous workplace pension.

Employers will move to Pensions Mutual and other UMES CDCs because they see it as more appropriate for their staff’s needs. They and their advisers and their unions may take the view that pots in the ceding DC occupational scheme or GPP would be better in the CDC scheme. They will be likely to want to request the trustees and providers of the ceding arrangement to pass money and records of unit ownership to the administrators of the CDC they participate in.

We consider it reasonable to expect money to normally be passed between schemes as it is currently passed between two DC schemes.

Where the pots requested are for staff who have joined the CDC scheme and the employer’s own occupational scheme then trustees should have no conflicts.

Bulk transfers for members of DC schemes which are winding up

It is unlikely the employer will want to maintain a scheme without future contributions. A CDC scheme may be asked to receive transfers from those who will have no ongoing contributions having left service with the employer. It is important that trustees of a CDC scheme can set up transfer value only membership for such employees.

This may also happen when a multi-employer DC scheme (a master trust) winds up. Participating employers who choose to move to a CDC scheme as the default option recommended by the DC provider and trustees will expect a bulk transfer for current staff who will be getting ongoing contributions, but there may also be members of the Mastertrust who no longer work for any participating employer transferring to CDC because of the master trust’s wind-up. This again will mean transfers into “transfer only” pots.

We are looking for clarification from DWP and TPR that, subject to appropriate due diligence, there will be straightforward, liability-free passage of transfers from DC to CDC.

There have been many delays in bulk DC to DC transfers because of small differences which create legal stumbling points relating to Value for Money and investment alignment. We hope that where the CDC scheme has been authorised by TPR, there will be no concerns about Value for Money and that transfers will be made by the ceding trustee without delay resulting from excessive due diligence.

Where we see conflicts for trustees as more acute is where employers ask their Master Trust provider to effect bulk transfers to a new CDC scheme for their staff.  These transfers are generally made without member consent, and trustees may not be comfortable with how pot to pension transfers will satisfy their fiduciary duty and manage their liability risk. Because of unfamiliarity, this concern is likely to be especially acute in the early years of CDC. However, such resistance could fundamentally undermine a CDC scheme’s financial viability.

There are also commercial risks where the Master Trust provider is unwilling to release AUM and is able to exert undue influence on the Trustee not to accede to such requests but instead to retain the assets. The Master Trust provider may, for example, be struggling to get to scale or is otherwise dependent on the revenue from the AMC on those being asked to be transferred. So we may find Master Trust trustees finding it ‘challenging’ to deny the provider’s wishes and be supportive of a transfer that is otherwise believed to be in members’ best interests.

There is insufficient clarity on the consultation response from the DWP (June 2026) to make it obvious the bulk transfer should be straightforward from DC to CDC schemes. We would like DWP and TPR to provide clarity.

We recognise that at present and till April 2028, bulk transfers cannot be made from GPPs to CDC schemes. We would expect for this to change when “override” provisions can be used to move personal pension pots into CDC schemes for collective pensions.

Tranches of consented requests treated as bulk transfers

Members of our onboarding team have explained how the consultation process promoting consolidation of DC pots to Pensions Mutual CDC scheme is likely to result in substantial numbers of requests to transfer (especially in the early days of CDC when workforces are likely to be large in scale).

We expect that employers who are establishing Pensions Mutual as a CDC scheme will consult with employees to establish if they want to opt-out altogether, or transfer the existing pot with the ceding DC scheme.

We expect a higher proportion of members to choose to transfer in existing pots depending on who is endorsing transfers. These initial choices to transfer are likely to be accelerated if explained by unions, advisors and employers. We propose to tranche the transfers resulting from the initial consultation and similarly for subsequent responses from members to send batches of transfer requests to the ceding DC scheme as a “bulk” transfer for ease of administration – we believe we could see upwards of 60% of members transferring from the previous DC scheme.

We would like the further guidance given by the DWP and TPR to include encouragement to ceding DC schemes to allow these batched transfers to be recognised as a bulk transfer for ease of payment.

How can the benefits of transfer be discussed with members looking at consolidating pots into CDC pensions?

We see three beneficiaries

1. The member is most important. If the member considers that CDC has the potential to improve their pension income, and that this increase is more important to them than the Freedom and Choice provided by DC, then their request to transfer should be respected. We foresee a high number of members wishing to transfer, especially if that option is endorsed by employers, advisors and unions. The potentially higher level of income and its relative stability, coupled with a far simpler transition into retirement, without risk of scams or unsuitable product purchases, are the benefits that unions and other employee representatives see as most important. The benefits are accelerated by transfer (whether with or without consent).
2. We foresee employers believing the conversion of pot to pension as an employee benefit. They might consider the accumulation and awareness of pension as useful in helping manage retirement for employees.  This could mean bringing forward retirement or encouraging retention of staff in work. We see some employers regarding a CDC pension as giving them an advantage in their reward package. Employers will need guidance as to how they can promote transfers without overstepping the advisory line. Guidance will be similarly helpful to advisors and unions (acting as member representatives).
3. The third organisation is the CDC Proprietor whose business plan will include transfers of assets at projected rates). Transfers are likely to be important to meet its targets for assets under management (AUM). AUM is important for the stability of the scheme in the early stages and in time it will generate profit and efficiencies that can be passed on to the other beneficiaries of CDC. The only source of revenue the Proprietor of a CDC has is its annual management charge (AMC) which is driven by AUM.

It is important that to all three beneficiaries, transfers are simple and efficiently carried out. Much of this will be achieved if the communication is transparent and straightforward to understand. We need clarification from TPR on how transfers are promoted. We hope that this will be discussed and then incorporated into the TPR Code on promotions.

The issues DC trustees may have from all types of transfers (and the risk this poses to CDC)

We are aware of concerns amongst some DC trustees that CDC is a more complex structure and therefore entails more liability risk for them than a straightforward transfer to another DC scheme, notwithstanding that the regulations are such that a transfer from CDC is – in effect – a pre-approved transfer option subject only to finer due diligence processes.

Our request to the DWP and TPR is to be given a clarification statement from them which gives ceding trustees confidence that a transfer from a DC to an authorised CDC scheme is a legitimate and liability free movement between authorised workplace schemes.

The CDC Proprietor should be required to make it clear to all members that (pre-retirement) members will retain access to all Freedom & Choice options by using the statutory transfer out.

We want to encourage DWP and TPR to make it clear that where the request for transfer is from an employee or employer and to an authorised scheme of which the member is already a part, there should be no obstacle to transfer by the ceding trustees. Similarly, when a DC occupational scheme (or even a GPP) is closing down, transfers to “transfer-only” CDC membership can be made.

We recognise that Master Trust trustees have conflicts discussed elsewhere but should point out that in recent years, many Deeds of Participation entered into by the employer have included a ‘right’ for the employer to request bulk transfers to their new scheme.  We think that such arrangements should be honoured whether the new workplace pension selected is DC or CDC.

If members are denied a transfer and the ‘distrust’ of ceding trustees is made known to them, this will reduce the confidence in the scheme that the authorisation process was designed to create. Responsibility will be required on both sides. The request for the relevant data about the owner (member) should be matched by responsibility by the employer who has made a request for data or for a bulk transfer.

We also believe that any potential blockage to the free flow of transfers between DC and CDC (in both directions) could seriously limit the number of Proprietors seeing CDC as viable, which will inevitably limit capacity to meet the likely demand for collective pensions.

We would like DWP and TPR to include a clear reason for the facilitation of transfers using a version of our logic.

Philosophical reasons for withholding payment of transfers and why we see little merit in them

This refers to individual, tranches of individual transfers and bulk transfers without consent, all of which could be blocked on an objection based philosophically through ‘misinterpreted’ fiduciary duty.

We have emailed letters to the chair of trustees of master trusts. We have asked them their intentions to meet requests for transfer from DC to CDC schemes. We have received roughly a 20% response which suggests that this is not yet seen as a matter to have a position on. There have even been complaints from recipients that a request is impertinent while a CDC scheme is yet to be authorised.

What response we have received has expressed what we refer to as “philosophical” concern. The concern relates to the movement of members’ money to a pension scheme where there is a perceived loss of Freedom and Choice. Even though this is at least in part mitigated by the availability of CETVs, there is a ‘speculated concern’ that the CETV  from a CDC may not represent VFM. A second concern that has been expressed is that retired members have no CETV option and so will have lost the freedom to spend as they choose.

This concern is much greater for members being transferred into CDC without their consent. Many deferred members may have lost contact with the trustee’s administration and have had no communication regarding the transfer and the philosophical objection is summed up by the trustee’s concern that in permitting a transfer to be paid, they would not have exercised their fiduciary duty.

We believe that these considerations arise from a fear of change and that what they need is assurance that the will not hold money transferred to CDC as a potential liability. It is understandable that such fear exists as they have not had sufficient assurance that on transferring to an authorised CDC scheme limited due diligence needs to be carried out.

We ask DWP and TPR to make it clear in guidance that the views of the member and in the case of bulk transfers, the employer, should not be overridden by a misinterpreted philosophical view of trustees’ fiduciary duty and a misplaced concern about future liability risk.

What needs to change for transfers to work as we think they should.

1. We call on the DWP and TPR to make it clear to DC providers and their trustees that there should be straightforward transfer between DC arrangements and CDC schemes.
2. We would expect the member’s request to be honoured without fuss by the ceding DC scheme and that it’s made clear by TPR and FCA to DC providers and trustees that it must only be in justifiable circumstances that transfers can be blocked.
3. There is insufficient clarity on the consultation response from the DWP (June 2026) to make it obvious the bulk transfer should be straightforward from DC to CDC schemes. We would like DWP and TPR to provide clarity.
4. We would like the further guidance given by the DWP and TPR to include encouragement to ceding DC schemes to allow these batched transfers to be recognised as a bulk transfer for ease of payment.
5. We need clarification from TPR on how transfers are promoted. We hope that this will be discussed and then incorporated into the TPR Code on promotions.
6. We would like DWP and TPR to include a clear reason for the facilitation of transfers using a version of our logic.
7. We ask DWP and TPR to make it clear in guidance that the views of the member and in the case of bulk transfers, the employer, should not be overridden by a philosophical view of trustees in the name of their fiduciary duty
8. We ask DWP and TPR to consider and address the potential commercial interference of Master Trust providers.

In conclusion

We need to have clarity first from the DWP and then from TPR that DC to CDC transfers should be as simple as DC to DC (as discussed in the recent consultation response on June 9^th, 2026, by the DWP over pension benefit transfers).

CDC schemes to be authorised need to pass due diligence from TPR and we argue that this is the due diligence that trustees can and should rely on and absolves them of liability if the CDC scheme is criticised by the member.

We also see CDC schemes having a responsibility to do their utmost to ensure that anyone with a transfer travelling to their CDC are aware of the differences between DC and CDC – in particular in terms of freedom and choice available within CDC.

We think that ceding DC trustees need clarification that transferring members to an authorised CDC scheme creates no liability to them and is comparable to a transfer to an authorised DC plan.

This clarification can help CDC schemes currently going through or about to go through authorisation. The lack of clarity is making it hard for CDC Proprietors and trustees to have 100% confidence in their business plans and likewise funders standing behind them.

This is frustrating all parties including DWP and TPR who are not seeing the expected numbers of CDC schemes applying for authorisation. The DWP and TPR’s frustration would be reduced with this simple clarification.

We do not consider that the problem will be long-term and once ceding trustees are more familiar with CDC as a concept, they will treat all CDC schemes as providing good levels of VFM and transfers being automatically approved once it has been better understood that CDC schemes must operate with the CDC Code of Practice set out by TPR.