UK – The UK’s Occupational Pensions Regulatory Authority is investigating 34 retirement schemes for “inappropriate actions” following their minimum funding review valuations, which in some cases have shown the schemes are more than 10% underfunded.
Opra said the 34 schemes had failed to revise as required the schedules of contributions following their MFR valuations. The schedules are used to set contribution levels. But 14 schemes the trustees and employers have yet to reach agreement on payments – including seven where the MFR level was under 90%, although this deficit could now have improved. Another 31 schemes were also below 90% funded, and these are being monitored as well as the schemes have three years to bring the deficits back to 90%.
Five schemes have changed the contributions level without agreement from the employer invalidating the schedule while three have convinced the sponsor to pay more but had yet to revise the schedule.
Another nine schemes have ignored updating the schedule, which, although required by Opra, might have been due to the MFR valuation showing contribution levels could be left unchanged.
Serena Mitchell, spokeswoman for Opra, said: “We will be going back to the 34 schemes as it is inappropriate there has been no action on updating the_schedule and our case work team will be following up to make sure there are no serious issues. We could fine the trustees £5,000 for an individual or £50,000 for a corporate trustee in any breach.”
Opra identified the failings in its first annual survey of the industry. The survey of a representative sample of 429 large and small, defined benefit and contribution schemes was carried out last autumn.
In another worrying finding, Opra found that the majority of small schemes’ trustees had had no training in the previous three years, compared to 25% of large schemes.
Opra said this result would inform its negotiations with the Department of Work and Pensions on the draft code of practice on training. The draft is expected later this year, before the new pensions regulator comes into force next April.