On the go: A consultation on a revised defined benefit funding code will be launched at the start of next year, according to Charles Counsell, chief executive of the Pensions Regulator.
Speaking at the launch of the pensions bill at the House of Lords on Wednesday, the watchdog’s chief executive said the industry can expect a high-level consultation from TPR on the content of the new code towards the beginning of 2020.
He said: "[New] funding powers mean we can be clearer about our expectations and quicker in taking tough action where we've got concerns... schemes and employers will need to demonstrate to TPR how their approach is prudent and appropriate.
"Alongside that comes the requirement for a new DB strategy statement from the chair of trustees, which will improve accountability and transparency of decision-making. Pension liabilities will have to be sat in the context of a long-term funding objective."
He continued: "Alongside this legislation we plan to publish a code of practice which better equips us to take enforcement action where we need to... we plan to consult on the revised DB code in early 2020."
DB trustees will be required to compile a statement on their approach to scheme funding. While it is uncertain whether the newly announced pensions bill will make it into law – as the current government does not have a majority in parliament – the consultation on the funding code is expected to go ahead regardless.
Paul Houghton, partner and head of actuarial consulting at Barnett Waddingham, said: “Trustees and sponsors can now expect to get some of the much-needed and long-awaited regulatory clarity in relation to scheme funding and in particular setting possible long-term strategies.”
He added: “Ultimately the new regime will take a little time to bed in, but the additional protections it offers are to be welcomed.”
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No mention of GMP equalisation in pensions bill
Commenting on the contents of the pensions bill, Claire Carey, partner at Sackers, pointed out there is no mention of easements to the existing statutory process of converting guaranteed minimum pensions into ordinary scheme benefits.
She explained: “Potential easements here have been on the government’s radar for several years now and, with conversion suggested by the government as a potential way forward for addressing the need to equalise scheme benefits for the effect of unequal GMPs following last year’s Lloyds case, this seems surprising.
“Perhaps this will be picked up as the bill winds its way through the parliamentary process?”
