In March, the watchdog launched a consultation on its proposed code of practice on scheme funding, which would establish a twin-track DB funding approach, with the aim of reducing average scheme dependency on sponsoring employers.
Schemes that opt for a prescriptive fast-track funding arrangement would be subject to less regulatory scrutiny, while those opting for a bespoke arrangement would face stricter oversight.
Mr Fairs noted that the regulator believes the “principles we set out in this consultation are still the right” ones, but some of the illustrative examples now need to be updated due to the coronavirus pandemic.
“It may well be that interest rates are low for quite a long period of time, it may be that asset returns are very different to the ones that we were anticipating back in March,” he said.
“Clearly it wouldn’t help the industry, it wouldn’t help us, if you set the parameters for fast-track such that very few schemes could actually go through that route,” he added.
This consultation is the first of two planned by the regulator, with the first stage concerned with codifying the principles underlying the new code, while the second consultation will deal with specific details and parameters.
However, TPR will not be launching the second consultation on the draft DB funding code itself until spring 2021 at the earliest, a spokesperson told Pensions Expert.
The watchdog will analyse the responses to the first consultation, further develop the rules and principles of the draft code, and then engage with the industry to test its ideas.
TPR will also wait for the final legislative package from government and the draft regulations, the spokesperson added.
