TPR – DB Funding Code: The Pensions Regulator’s (TPR) thinking on its new defined benefit (DB) code has evolved significantly, the watchdog’s executive director of regulatory policy, analysis and advice has said. Speaking at a recent Professional Pensions’ Trustee Senate, David Fairs said the regulator’s second consultation on the new code was dependent on the Department for Work and Pensions issuing its own regulations – something he said that was on track for “late spring”. He said this would enable the regulator to issue its own second consultation on the code in “late summer”. But Fairs added the regulator’s thinking with regards to the DB funding code had “evolved a lot” – noting TPR was currently working through how it was going to communicate this evolution to the industry. He said: “We are going to be engaging with industry, with advisors and with trade bodies to explain how our thinking has developed and why we’re now thinking what we do.”
Fairs said TPRs annual funding statement signalled the regulator would start this process with the revision of is covenant guidance, noting that it would begin engaging with covenant advisers on this over the coming month with a view to publishing something on covenants in the early summer.
He said this work on covenants was “one of the building blocks” of how its thinking had developed – noting some of the changes it is making in this area would become fully understood as the regulator revealed more on the new DB funding code in due course
DC Benefits – Stronger Nudge Reminder: Last month, we reported that DB schemes with AVCs would have to comply with the requirement to give a ‘stronger nudge’ to members to take appropriate guidance from Pension Wise. The new requirements applied from 1st June and so schemes must comply with the new requirements for any member with AVCs prior to retirement. TPR’s guidance on the stronger nudge can be found here: TPR DC Communication
TPR – Annual Funding Statement Analysis: TPR has issued some analysis following its annual funding statement in April. The modelling indicates that schemes undertaking valuations with effective dates between 31st December 2021 and 31st March 2022 will show improved funding levels from those reported at the previous valuation. This is due largely to additional asset returns, contributions, and the alignment of RPI to CPIH from 2030. TPR has estimated that 61% of schemes have a funding surplus at 31st March 2022. TPR has noted that the analysis does not make allowances for how Covid 19, Brexit and the Russian invasion of Ukraine may have impacted employer covenants. Weakening could require a strengthening of technical provisions, increasing the value placed on the scheme’s liabilities.
HMRC – Action needed to migrate schemes to Managing Pension Scheme: HMRC has issued pension schemes newsletter 138, which provided information about migrating pension schemes from the existing Pensions Schemes Online service to the new Managing Pension Schemes service (MPS). We have already written to clients who act as Administrators (as defined by HMRC) to provide information on registering with MPS. The second step is for Administrators to migrate their schemes from PSO to MPS. A lot of information is required, not only about the scheme, but about the sponsoring employer. Those registered as Administrators should now look at the information needed and take action to collect it so they can migrate their schemes. The HMRC Newsletter can be found here: Pension Schemes Newsletter 138
Audit Reform: The Government plans to replace the Financial Reporting Council with a new statutory regulator, to be known as the Audit Reporting and Governance Authority (ARGA). There could be significant changes to the audit and corporate governance regime. ARGA will also be given responsibility for overseeing and regulating the actuarial profession.