Background
The Pensions Regulator (tPR) has published an interim response to its first consultation on a new funding code for defined benefit pension schemes.
The Regulator noted that it has received over 6,000 comments from 127 respondents. It therefore proposes to produce a full summary of the consultation responses when it publishes the second consultation later this year. In the meantime, it has said that responses broadly supported the proposals but with some concerns over how they would apply in practice.
Overview of the Code of Practice
As a reminder, the proposals include a twin-track funding regime with ‘Fast Track’ and ‘Bespoke’ routes. The Fast Track route will use largely prescribed assumptions which will require minimal involvement from the Regulator in a valuation. The Bespoke route will allow schemes more freedom, but they will have to justify the assumptions they make and show that they are managing the resulting risks appropriately. The consultation sought views on this approach and some of the detail around how assumptions could be set and assessed under each route.
Future progress of the Code of Practice
The Regulator plans to publish a second consultation in the second half of 2021, after the new Pension Schemes Bill has passed through Parliament, to include:
• A full summary of the responses to the first consultation
• A draft Code of Practice
• An impact assessment.
We hope to see a new Code of Practice in force in 2022.
Next steps
The above is a high-level overview of the response. If you would like to review the response in more detail, please use the following link: https://bit.ly/3oVglqb
If you would like to discuss this note, please feel free to speak to your usual Quantum Advisory contact.
18 June 2021