UK - The Pensions Regulator's statement today on how it will regulate the funding of defined benefit pension schemes has met with a warm response.
“There was little disagreement with the broad regulatory framework suggested, and respondents to the consultation indicated broad support for the use of filters, or ‘triggers’, to help the regulator prioritise its workload,” the regulator said. The statement follows a consultation.
It emphasized that the triggers are primarily a mechanism for the regulator to focus its resources. “They are not and should not be seen as targets for pension schemes.”
And it said that the buy-out measure is now less important in defining the technical provisions trigger.
“Particular concern was expressed over the practicality or desirability of using a percentage of a scheme's solvency measure in setting the technical provisions trigger.”
And it said it would be flexible when considering recovery plans. “In deciding whether to take action where a recovery plan has triggered, full regard will be given to the impact any change to the recovery plan may have on the employer's viability, including its ongoing ability to fund the scheme and its long term health.”
"We thank the industry for its input during consultation,” said chairman David Norgrove. “We have listened carefully to comments made, and have made some changes to our approach as a result. We have therefore set out in this statement what we consider to be the most appropriate approach to regulating the new regime.”
Christine Farnish, chief executive of the National Association Pension Funds, said: ‘Today’s report shows that the Regulator has listened to feedback and is alive to the need to strike the right balance between security for scheme members and affordability to sponsoring employers.”
The Confederation of British Industry said: "Companies will be relieved that the Regulator has listened to many of their concerns on the new pensions funding standard. It is vital that the new pension funding rules are 'scheme specific' so that individual companies' circumstances are fully taken into account.”
And consulting firm Watson Wyatt added: "The Regulator is showing a good understanding of the complexities of scheme funding and of the need for a flexible regime, that is truly scheme-specific."
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