UK – The UK government has decided to further delay new defined benefit scheme funding requirements until the end of this year, saying it’s important that it gets the regulations right.
Critics said it was trying to “reconcile the irreconcilable” in trying to meet the demands of the new Institutions for Occupational Retirement Provision directive.
“New scheme funding requirements will come into force on December 30 2005,” the Department for Work and Pensions said. The regulations – designed to replace the old Minimum Funding Requirement - will apply to most private sector DB plans.
The DWP said the move followed “further consultation” with pensions industry experts on draft regulations that were amended to take account of responses to the general consultation earlier this year. It said: “The revised timetable will allow the department to make the necessary technical amendments to these detailed regulations.”
"These are important regulations affecting private sector defined benefit occupational pension schemes and this is why we wanted to make sure stakeholders had the chance to make their views known,” said pensions reform minister Stephen Timms.
"We are all agreed that it is in everyone's interest that we get the regulations right, so that is why we have taken the extra time to take on board stakeholders' comments."
“The government has the unenviable task of setting funding standards within the European pensions directive framework which deliver against its rhetoric about flexibility while controlling the risk of schemes claiming on the Pension Protection Fund,” said Tim Keogh, worldwide partner at Mercer Human Resource Consulting.
“These aims are mutually incompatible. In short, the government is trying to reconcile the irreconcilable.
“The authorities should stop fudging the issue and set out clearly what they want to achieve.” The firm believes even more consultation may be on the way.
The government still intends that the new rules will apply to actuarial valuations based on an effective date of September 22 which are completed after the revised coming into force date of December 30.