TPR launches consultation on defined benefit pensions

The Pensions Regulator (TPR) has published a consultation on defined benefit (DB) pension regulation.

Its Defined benefit consultation: setting a balance approach sets out how TPR intends to balance its new objective to minimise the impact on employers’ sustainable growth with its existing DB funding objectives.

The new objective is contained in the Pensions Bill 2013, currently before Parliament.

The content of the consultation also reflects how TPR’s approach to DB funding has evolved over the past eight years in light of its experience, and that of the pensions sector, in managing the risks in DB schemes.

The consultation includes:

  • A draft funding code of practice that provides practical guidance to help pension trustees meet the requirements of scheme funding legislation.
  • A draft regulatory strategy setting out at a high level TPR’s risk-based approach to tackling issues in DB pension schemes.
  • A draft funding policy describing in more detail TPR’s intended approach to regulating DB funding issues.

TPR intends to hold a series of events and meetings with key industry stakeholders and experts during the consultation period in order to gather their feedback on both broad principles and narrow technical issues.

The consultation period closes on 7 February. It is anticipated that the new code will be in force by July 2014 and will apply to schemes undertaking valuations from that time.

Stephen Soper (pictured), interim chief executive at TPR, said: “We welcome the transparency that our new objective on employer growth brings to the DB funding regime and we look forward to working with trustees, employers and the wider pension community to ensure that it is implemented in a balanced way.

“Investing in sustainable business growth is central to being able to provide a long-term future for any organisation and its pension plan. The best support for a DB pension is a strong employer and effective trustees working together to manage and balance the risks to their business and scheme.

“Our revised code of practice emphasises the importance of pension trustees and employers working collaboratively to establish viable, long-term funding plans.

“We place a strong focus on education and enablement to help schemes to achieve appropriate outcomes. The needs of employers and schemes can be reconciled in the vast majority of cases through good working relationships without the need for our involvement.”