Revised Defined Benefit Code of Practice
The Pensions Regulator has recently published a draft code of practice on defined benefit funding. The aim of the new code is to help trustees and sponsoring employers to agree funding plans that provide both security for retirement savings and enable employers to invest in sustainable growth.
- Some of the key changes to the code are:
- Shortening of the code by 20 pages.
- Using the precise Pensions Act 2014 wording of the new objective throughout the code.
- Changing the emphasis on reasonable affordability, away from repaying deficits as quickly as reasonably affordable, to considering the appropriate period in which to do so in view of the risks to the scheme and impact on the employer.
- Ensuring that proportionality is properly referenced and emphasised throughout.
- The Balanced Funding Outcome indicator has been renamed the Funding Risk Indicator, and it has been emphasised that this is just one of many tools that should be used.
- They have also made it clear that they do not exclusively focus on just large pension schemes and have included statistics to back this point up.
The changes should bring more clarity to the code and add emphasis to the important concepts included within it.
For more information on The Pensions Regulator’s code of practice please visit www.thepensionsregulator.gov.uk/db-pensions
Date: 19th June, 2014
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