TPR CDC code: LCP Welcomes TPR’s CDC code but warns key non commercial models are overlooked

LCP believe TPR’s draft multi-employer CDC code is an important step forwards and will enable six-month approvals processes to commence from the 31 July 2026 deadline envisaged by regulations.

The draft code provides a useful toolkit for Trustees and other practitioners looking to launch CDC schemes over coming months.

In their response to the consultation, LCP have raised the point that the draft code implicitly assumes all multi-employer CDC schemes will be commercial entities. This means that, at present, the draft code is lacking in important guidance for a key group of not-for-profit schemes being established by paternalistic employer groups. If we are to avoid putting barriers up for these important schemes, this will need to be addressed in the next round of drafting.

Steven Taylor, LCP Partner and Head of CDC, commented: "A key model for a traditional employer group to set up a CDC scheme is as a new section to an existing trust, potentially using an existing surplus to provide the contingent financial resources that the CDC section may need in the future. Importantly, this means that these resources would already be held by the scheme, rather than need to be supplied by a commercial entity, the Scheme Proprietor. We look forward to continuing to engage with TPR and helping our clients navigate exciting upcoming approvals processes over the coming months."

Donna Matteucci, Senior Consultant, LCP added: "Whilst not-for-profit models were envisaged by CDC regulations, TPR’s guidance focusses almost entirely on commercial models where financial resources are all held by a Scheme Proprietor. It would be helpful for the code to set out in addition, the nature of the financial tests that non-commercial Scheme Proprietors can use to demonstrate that resources already available to the scheme are sufficient to meet future financing needs, rather than assuming resources must be in the day-to-day possession of the Scheme Proprietor outside of the trustees control."