In March this year, The Pensions Regulator (TPR) has launched a consultation and accompanying quick guide on its plans to revise the Code of Practice on defined benefit (DB) Scheme Funding. The Code provides practical guidance to trustees and sponsors of DB pension schemes on complying with scheme funding legislation.
It is TPR’s intention that this will be the first of two consultations on the new Code, in which TPR is seeking views on its broad approach to regulating scheme funding. Given the challenges facing UK businesses as a result of the Covid-19 outbreak, TPR’s consultation is understandably taking something of a backseat for the time being.
Eventually however, the attention of companies and trustees will return to managing long-term funding and investment strategies in a new regulatory regime. Meanwhile, in its 2020 annual funding statement, TPR has confirmed that an extension of consultation period to September will mean the new Code will not formally come into force until “late 2021 at the earliest”.
This briefing note (updated in April 2020 to reflect recent developments) covers:
- The background to the code of practice consultation
- The key principles set out by TPR
- Long-term funding objectives
- The ‘twin-track’ approach to compliance (Fast Track vs Bespoke)
- The actions trustees and sponsors should be taking now.
For schemes with valuations underway or with effective dates in the near future, some forward planning is advised, even if the Code hasn’t come into force by the time their funding approach is finalised.
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