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TPR hints at flexibility in corporate planning

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UK - The Pensions Regulator (TPR) has acknowledged the extra pressure trustees and employers are facing in the current economic conditions and agreed its regulation must remain "proportionate and targeted".

A revised version of TPR's corporate plan for 2009-2012, updated in response to the financial instability, is said to be designed to reassure managers of DB schemes that the scheme-specific funding regime "has sufficient flexibility to cope with the impact of the downturn".

In the introduction to the report, Tony Hobman, chief executive of TPR, and the chairman David Norgrove said the new plan "reflects the pressures that trustees and employers are facing in the present economic climate" and revealed it is "moving resources to areas that may need extra support".

The plan said: "Clearly, recent economic conditions will have an impact on schemes moving forward and we would expect to see this reflected in both funding and recovery plan lengths, which we will continue to scrutinise".

TPR confirmed that the position of trustees of a scheme in deficit is "akin to an unsecured creditor", but revealed the corporate plan had "set out the option to renegotiate recovery plans to repair scheme deficits, making clear that the best support for a pension scheme is a viable employer".

As the impact of falling equity prices and lower bond yields has increased pension fund deficits - with the PPF 7800 Index reporting an aggregate deficit of £242bn at the end of March - TPR admitted: "Through the downturn it will be even more important to remain proportionate and targeted [with regulation] to help reduce burdens on businesses in increasingly difficult economic conditions." (See earlier IPE article: DB deficit hits £242bn despite changes to data)

The document also revealed the number of clearance enquiries handled by TPR has slipped to around 100 a month, and suggested the lower volumes support evidence suggesting "in more straight-forward cases the system is becoming largely self-regulating".

Meanwhile, TPR also emphasised a continued focus on DC schemes, particularly ahead of 2012 when the regulator will be responsible for the new system of personal accounts, and trustees they must have "clear and appropriate processes for members approaching retirement, and should encourage review of investments, contributions and target retirement dates".

To continue this work, TPR confirmed the first edition of DC trust-based landscape  - a comprehensive look at DC data and analysis - is being published in the summer.

Hobman said: "We continue to take a regulatory approach which is vigilant to the immediate risks both DC and DB schemes are facing and is focused on achieving good long-term outcomes, acknowledging that the interests of pension savers are best served by enabling employers to play their part in the economic recovery."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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