Sixty Second Summary
Revising the DB funding Code
16 May 2019 - Estimated reading time: 1 minute
The Pensions Regulator has announced some details of the forthcoming revision of Code of Practice No. 3: Funding Defined Benefits. As anticipated, the aim of the exercise will be to clarify the Regulator’s expectations, particularly by encouraging trustees to adopt a long-term outlook. The Regulator intends to put forward options for the revised funding framework before re-drafting the Code. It will conduct public consultations at both stages, with the first phase pencilled in for the summer of 2019.
In its March 2018 White Paper, Protecting Defined Benefit Pension Schemes, the Department for Work and Pensions (DWP) said that the Regulator would revise the Code of Practice to clarify how trustees might show that the required prudence has been exercised in the calculation of their scheme’s ‘technical provisions’ (i.e. liabilities), and how they should judge the appropriateness of recovery plans, as well as requiring them to take a long-term view when setting their statutory funding objective. It also indicated that compliance with the revised Code (or parts of it) would become mandatory.