Fast Track
to problems? Why TPR’s new DB funding code needs to be flexible

Policy papers

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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. 

What's on point? 

LCP’s on point papers delve behind the headlines of topical issues and news on the pensions and finance agenda. Our experts give their insight and analysis on a variety of topics, shining a light on potential policy responses, outcomes and solutions.  

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How we can help

We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.

We help trustees achieve their strategic goals, with solution-led, appropriate advice.

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