23 July 2020
In March of this year the Pensions Regulator (TPR) launched its first consultation on its new defined benefit (DB) funding code of practice.
The new code is fully expected to be the biggest shake-up in the financial management of DB pensions in over 15 years and will have significant implications for many, perhaps most, DB pension schemes in the UK.
This paper takes a closer look at the proposals outlined in the consultation, analysing important areas where we think there could be unintended and potentially negative consequences for some scheme members, scheme sponsors and the PPF.
Key findings include:
- There is a key concern around the potential overreach of the Fast Track regulatory approach, and its use as a benchmark for Bespoke valuations. We used Integrated Risk Modelling to show that there should be more flexibility in the Bespoke regime.
- There are several other areas in the consultation where some trustees and sponsors may have particular concerns including the treatment of open schemes, the potential for gaming the system and the balance of risks between pension schemes and other stakeholders.
- Who we think should be responding to the consultation, including the types of schemes that we think are most likely to be impacted by what is being proposed.