Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021
Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021
  • Why develop a CDC framework?
  • Key features of the CDC framework
  • Classification of ‘collective money purchase benefit’ as a money purchase benefit
  • Definitions of ‘collective money purchase benefit’ and ‘collective money purchase scheme’
  • Tax-registered status of CDC schemes
  • Authorisation regime
  • Calculation and adjustment of benefits
  • Supervisory regime
  • Triggering events and continuity options
  • More...

Collective defined contribution (CDC) schemes under the Pension Schemes Act 2021

STOP PRESS: On 11 March 2021 the Finance (No. 2) Bill was published, having received its first reading in Parliament on 10 March 2021. The Finance Act 2021 received Royal Assent on 10 June 2021.

The Act contains two provisions relating to pensions:

—section 28 freezes the standard lifetime allowance (as announced in the Budget on 3 March 2021 and being the maximum amount of tax-relieved pension savings that an individual can build up over their lifetime) by removing the indexation of the standard lifetime allowance for the tax years 2021–22 through to 2025–26, with the effect that the amount of the standard lifetime allowance for each of these tax years will be maintained at £1,073,100, which is the 2020–21 amount. The change is effective from 6 April 2021

—section 29 and Schedule 5 of the Act set out the tax treatment o fcollective money purchase arrangements (also known as collective defined contribution (CDC) schemes and incorporates the collective money purchase provisions introduced by the Pension Schemes Act 2021 into the pensions tax relief provisions in Part 4 of the Finance Act 2004, ensuring that the unique nature of those benefits can operate within Part 4 without creating unintended unauthorised payments charges. This will open up access to pension tax relief
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