UK delays new scheme funding requirements
UK – The UK’s Department for Work and Pensions says the new funding requirements for defined benefit occupational pension schemes will now come into force on October 31, slightly later than planned.
It said the delay would have “minimal” effect.
The regulations - stemming from the new Pensions Act - had been expected to be in place by September 23, in line with the timetable for implementing the European pension fund directive.
“The slight delay in publishing the regulations arises from the need to take account of the many issues raised by the pensions industry as a result of the extensive consultation the department undertook on draft regulations earlier this year,” the DWP stated.
The regulations will apply to any valuation completed after October 31 which is based on a date (known as the effective date of the valuation) on or after September 22.
The DWP says it recognises that the pensions industry is keen to know the details of the final legislation.
“However, it believes that it is more important that the original draft legislation should take full account of all the concerns which have been raised.”
It added that transitional arrangements mean that schemes can move from the current minimum funding requirement to the new arrangements “in line with their normal three yearly valuation cycle”.
“The delay will have minimal practical effect, since it comes at the beginning of what is usually a lengthy process of conducting an actuarial valuation of a scheme's assets and liabilities, taking up to 15 months in total,” the department said.
The new arrangements will require trustees to take actuarial advice before making funding decisions and to have in place a recovery plan where an actuarial valuation identifies a shortfall.
"The new scheme funding requirements will replace the MFR and will allow the trustees of each scheme to develop an appropriate funding strategy which takes account of the specific factors and circumstances of their scheme,” said pensions minister Stephen Timms.
Pensions Regulator chairman David Norgrove added: “We will provide clear guidance for trustees of defined benefit schemes on their responsibilities in relation to scheme funding.
“When making scheme funding decisions, trustees should be better equipped to negotiate with the sponsoring employer after taking actuarial advice, and to ensure that an appropriate recovery plan is in place to meet any funding shortfall."