The Regulator proposes overarching funding principles based on its existing focus on integrated risk management and long-term planning. It will introduce a new "fast track" valuation approach with fixed parameters (a large part of the consultation focuses on the details for this): schemes adopting this approach can expect minimal funding scrutiny. the alternative, equally acceptable, "bespoke" approach will allow schemes to deviate from the fast track parameters without regulatory intervention on funding if they can explain and evidence their decisions to the satisfaction of the regulator, including how risk is being managed.
This regime will be introduced by a replacement DB funding code of practice, alongside the requirement due to be introduced by the pension schemes bill for schemes to have a "funding and investment strategy" and a "statement of strategy" document with prescribed content.
This consultation was originally due to run until 2 June 2020 but the consultation period has been extended to 2 September 2020 in light of the coronavirus disruption. The Regulator will publish a further consultation on the text of the new DB funding code of practice later. It expects the code to come into force at the end of 2021.
For more detail, see our briefing note.
This is an extract from our 81st issue of What's Happening in Pensions.
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