As part of budget 2025 announcements have been progressed in relation to collective money purchase schemes.
What a CMP
The Pension Schemes Act 2021 introduced CMP schemes (also known as collective defined contribution (CDC) schemes) as a new type of trust based occupational pension scheme. Currently CMPschemes are only available to single or connected employers. However, the Department for Work and Pensions (DWP) are expanding this to allow for unconnected, multiple employer schemes (UMES).
As UMES are not intended to be used for employees of the person establishing the scheme, they are not occupational pension schemes (OPS) for tax purposes. Where a scheme is not an OPS, unless the person setting up the scheme has permission under the Financial Services and Markets Act 2000 (FISMA) to establish a personal pension scheme or stakeholder pension scheme, an application to register the scheme cannot be made.
HMRC registration
CMP schemes, like Master Trust schemes, are required to be authorised by the Pensions Regulator (TPR) to be able to operate lawfully. HMRC has the ability to decide not to register or to de-register a Master Trust scheme that is not authorised by TPR. Current legislation could require HMRC to register a CMP scheme that failed TPR authorisation requirements.
This measure enables unconnected, multiple employer CMPschemes to apply to HMRC to become a registered pension scheme and allow HMRC to refuse to register or to de-register an unauthorised CMP scheme.
The government will also take a regulation-making power to allow HMRC to legislate for CMPschemes more efficiently in the future.
What’s the change?
The government is to introduce legislation in Finance Bill 2025-2026 so that certain CMP schemes are:
- treated as occupational pension schemes (OPS) for tax purposes
- capable of applying to HMRC to be registered for tax purposes under Part 4 of Finance Act 2004
- capable of being refused registration by HMRC if the CMP scheme is not authorised by TPR
- capable of being de-registered if the CMP scheme becomes unauthorised
The government will also introduce a regulation making power so that HMRC can more efficiently legislate for necessary changes to CMP schemes or benefits in the future.
PAYadvice.UK 3/12/2025