The Pensions Regulator’s (TPR) second consultation on new funding rules for UK defined benefit (DB) schemes will be delayed until “late summer” of next year.
In a blog post today, David Fairs, executive director of regulatory policy, analysis and advice, attributed the delay to the need for the draft code and government regulations to “work together in a coherent and integrated way”.
However, according to Fair’s blog the Department for Work and Pensions’s draft funding and investment regulations are now only expected to be published in the spring of 2022.
Fair said TPR wanted to “take the opportunity to learn from DWP’s consultation”, and that the second consultation on the draft code would therefore not follow immediately after the DWP’s consultation, but would be launched in the last summer of 2022.
The second TPR consultation will comprise a draft of the new code itself.
Jon Camfield, partner at LCP, said late summer 2022 represented “another big delay in the timetable, and demonstrates just how hard it is to come up with a workable framework, particularly in an uncertain post pandemic world.
“This means that the new regime won’t impact on actual contributions payable to pension schemes until at least 2024 and perhaps later.
“We suspect that [TPR’s] decision was made easier by the continued healthy position of pension schemes in today’s market conditions, but it continues to leave a lot of uncertainty for employers and trustees trying to plan for the long term future of their scheme.”
Fairs said he hoped there was no uncertainty around the regulator’s expectations for DB schemes in anticipation of the new code. “It is very much business as usual, in line with what our annual funding statement sets out on valuations already in progress.”
Fairs also acknowledged concerns about the regulator’s proposal to measure risk in so-called ‘Bespoke’ funding plans against ‘Fast Track’. He said TPR continued to believe this was important, “but we are conscious that there needs to be room for schemes to approach risk in a way that is consistent with their individual circumstances”.
“We are considering the best approach for trustees to demonstrate compliance with the legislation and measure and evidence that the risks they are taking in Bespoke are supportable. We are also considering how best to incorporate covenant into both Fast Track and Bespoke to ensure it can be used in the most flexible way to justify risk-taking.”