Pensions Weekly Update – 21 December 2022

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Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pensions Regulator (TPR) has published its consultation on a new draft funding code of practice for defined benefit (DB) pension schemes (as well as a response to its first funding code consultation, which it ran in 2020). The draft code is intended to provide “practical guidance on how trustees can comply with scheme funding and investment requirements”. TPR recognises that the draft code reflects the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2023 and that these draft regulations may change, depending on the outcome of the Department for Work and Pensions’ recent consultation on the regulations. TPR explains that it has, however, opted to consult on the draft code now to “help the industry reach a more complete view of how the regulations may be interpreted and implemented”. TPR expects that the earliest the final regulations and the code will come into force together will be 1 October 2023.
Alongside the draft funding code, TPR has also published a consultation document on “Fast Track” and its regulatory approach. In this document, TPR confirms that it plans to adopt a twin track approach to assessing DB pension scheme valuations, incorporating both Fast Track and “Bespoke” approaches. The Fast Track approach will be used as a filter by TPR when assessing the actuarial valuation documentation submitted to it. If a scheme’s valuation submission meets the Fast Track parameters (and this is confirmed by the scheme actuary), TPR has indicated that the submission is unlikely to be scrutinised further. Alternatively, trustees will have the option of following the Bespoke approach, if seeking greater flexibility or scope to select an approach that suits the specific circumstances of their scheme. Bespoke valuation submissions may be subject to more detailed analysis, although TPR has stated that it expects “many Bespoke valuation submissions will not result in detailed scrutiny or engagement”. TPR has decided not to embed this regulatory approach into the draft code, and proposes to keep Fast Track separate. One reason given for this is that TPR will then have greater flexibility to change Fast Track, without requiring a change to the code.
Have you tried our festive pensions crossword yet? Complete it before the end of Thursday this week to be in with a chance of winning a prize.
In this recent blog, we consider some of the fall-out arising from liability driven investments and practical next steps for pension trustees.
Season’s greetings to our clients and contacts over the festive period. We hope you have a restful break. Our weekly update will resume on 11 January 2023.