24 March 2023
The 桃子视频 (IFoA) believes it is essential for both the Funding Code and the Regulations supporting defined benefit (DB) pensions to be consistent if they are to be workable and implementable by trustees. The IFoA鈥檚 response to the Pensions Regulator鈥檚 (TPR) points out that trustees will be required to comply with the law as set out in Regulations from the Department for Work and Pensions (DWP), not the Code. The two must be completely aligned to avoid confusion for trustees and any lack of clarity on trustees鈥� and sponsors鈥� legal requirements.
The IFoA supports TPR鈥檚 decision to maintain the Funding Code鈥檚 scheme specific nature and the flexibility incorporated into the current draft Code. We agree with TPR鈥檚 proposal to separate the Code and Fast Track guidance but have identified areas where further clarification would be helpful, in particular in relation to a Scheme Actuary鈥檚 role in confirming to TPR that three Fast Track tests have been satisfied.
Leah Evans, Chair of IFoA Pensions Board, said: 鈥淭PR has rightly recognised that pension schemes, which differ in size, funding, and investment strategy, need some flexibility in the Code. We support the clarity that provides for schemes to take a bespoke approach to the Code while offering a fast-track route for regulatory supervision where this is appropriate and certain criteria are met.
鈥淗owever, there are areas which require further consideration in both the DWP鈥檚 draft Regulations and TPR鈥檚 draft Code if they are to be successful when the new funding regime is introduced, potentially later this year - most notably, the proposed approach to the calculation of significant maturity, the definition of low dependency and the requirements for schemes already past their relevant date when they first carry out a scheme funding valuation under the new requirements. It is essential that the final Regulations and Code work together on these points.
鈥淭here is a high degree of complexity around the Code itself and the Regulations which provide the overall framework, complicated by TPR having oversight of the Code and DWP having oversight of the Regulations. For this reason, we would urge both DWP and TPR to seek further industry review of the Code and the Regulations before finalising the new regime.鈥�
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