Commenting on today’s announcement from the Pensions Regulator (TPR) on how it intends to respond to the first consultation on the new DB funding code, Laura McLaren, Partner, Hymans Robertson, says:

“Given the tone of TPR’s response, it seems unlikely the key principles underlying the new code are set to change fundamentally. However, there is some welcome reassurance that TPR will address the concerns raised by respondents.

“In particular, many trustees and sponsors will be comforted that both COVID-19 and post-Brexit recession risks will be factored into where the final Fast Track parameters are pinned down. Given the challenging developments since the consultation was published there has been a growing sense that these would need to be set more flexibly so Fast Track remains an achievable target for most schemes, at least in the short term.

“It is also encouraging that TPR will address calls for more detail on what will be acceptable under the Bespoke track and the supporting evidence needed. Our hope is that this will address widespread concerns around the potential overreach of the Fast Track regulatory approach, and TPR’s enforcement evolving in such a way that this might undermine the scheme specific nature of the Bespoke route. We see the flexibility offered by Bespoke as essential for many schemes.

“At this stage the interim response doesn’t offer much in terms of specifics. Those will come in the second consultation which TPR has confirmed it will not be launching until the second half of 2021. Although TPR indicates it will continue to communicate over that period, given the lengthy build up, some may have hoped for this sooner rather than later. Certainly, pension schemes which are due valuations this year will have the challenge of navigating this ongoing regulatory uncertainty. Any further delays to timings may run the risk of stifling decisive action from trustees and sponsors in the meantime.”