In January 2021, the Pensions Regulator (TPR) published its first response to its first defined benefit (DB) code of consultation on improving funding pension schemes that will lead to new legislation.
There were over one hundred responses with thousands of comments. 32% of responses were from pension advisers and 21% were from pension trustees, with key matters being:
- TPR’s proposed regulatory approach (twin track routes to demonstrating compliance: Fast Track and Bespoke)
- the principles that should underpin all valuations in the revised framework
- ideas on how these principles could be applied in practice to provide clearer guidelines
There is a thorny problem of how to make work the proposed twin-track regime (Fast Track and Bespoke) in the very challenging Covid-19 current economic conditions. The revised code of practice when formulated would have to be consistent with new legislation, which means waiting for the passage of the Pension Schemes Bill through Parliament and DWP’s consultation on draft regulations. As a result, part 2 of this DB code of consultation will wait until the second half of 2021.
TPR announced that this second funding code consultation in the second half of 2021 will include:
- a full summary of the responses to the first consultation and the approach TPR has taken in light of these responses and the final legislative package
- the draft code of practice for consultation and proposed regulatory approach, including developing thinking around:
- TPR’s process to review and update Fast Track guidelines
- TPR’s approach to assessing valuations
- engagement with DB schemes
- an impact assessment and supporting analysis
The TPR interim response can be found at:
Details of the consultation which include a quick guide are found here: https://www.thepensionsregulator.gov.uk/en/document-library/consultations/defined-benefit-funding-code-of-practice-consultation
With the economic situation as it is, this could be one of the most significant codes impacting businesses, pension scheme members and workers in general.