The Pensions Regulator has published its interim response to its first consultation on the defined benefit code of practice. The changes require the Pensions Regulator (tPR) to update its Code of Practice on Scheme Funding.
In its first consultation, tPR introduced its proposed guidelines for fast track and bespoke routes for schemes to carry out scheme valuation and to demonstrate compliance with the statutory funding regimes.
Some concerns have been raised regarding tPR's proposals and tPR's response says that some of these arise from misunderstandings in relation to the proposals. It has said that it will provide further clarification in its second consultation which should take place in the second half of 2021.
One particular concern related to the impact of COVID-19 on employers and schemes. tPR's update confirms that it will take account of COVID-19 when it carries out its impact assessment and develop its Fast Track guidelines.
The Pension Schemes Bill is still working its way through Parliament. Once it has received Royal Assent, DWP will then look to consult on draft statutory funding regulations. It is anticipated that DWP will issue its consultation in the first half of this year.
It is three years since the government white paper on Protecting Defined Benefit Schemes and with part two of tPR's consultation taking place later this year, it is unlikely that the new funding regime will apply to schemes before 2022 at the earliest.
In our interim response we provide some background on the responses we received and outline the steps we’ll be taking to publish our full response to the first consultation and our second consultation on a draft DB code of practice