TPR’s funding code: too late to the party?

The pensions industry has hit back at the UK’s pensions regulator (TPR) regarding a second consultation on the Funding Code scheduled for this autumn.

The regulator has this week outlined as part of its new corporate plan its priorities for the next two years to protect savers.

However, this already delayed second consultation has called for concerns from the UK’s pensions industry since the Funding Code is likely to only come into force in September 2023.

Iain McLellan, head of research and development at consultancy Isio, said that “with scheme funding levels continuing to improve, de-risk and insure, there is a question as to whether, when it does finally come into force, the new funding code will be too late for its own party?”

Laura McLaren, partner at Hymans Robertson, added that pension schemes that are due valuations before 30 September 2023 will have the challenge of navigating some ongoing regulatory uncertainty.

“This may run the risk of stifling decisive action from trustees and sponsors in the meantime but we’d hope that most schemes already looking ahead to the changes,” she said, adding that it makes “very little sense” to agree a funding framework in 2022 or 2023 without understanding how it’s likely to work with the new code in 2025/2026.

Shayala McRae, Principal at LCP, said: “This is far from ideal as schemes continue to have to prepare funding valuations in line with the current regime, knowing that new rules are coming down the track.”

TPR’s priorities

The regulator highlighted that maintaining the fight against pension scams, measuring value for money for savers and helping schemes become ‘dashboard ready’ are among its top priorities in its new corporate plan for 2022-2024.

Over the next two years, TPR will continue to call on schemes to take its pledge to combat pension scams, work closely with the Department for Work and Pensions and Financial Conduct Authority on a future consultation for a Value for Money Framework and assess how smaller defined contribution schemes offer value for money.

Working with partners on the Pensions Dashboards Programme, TPR will also launch a programme of education, highlighting the steps schemes need to take to meet their dashboard duties, including what data to prepare.

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