DB scheme funding—the Pensions Regulator's approach
DB scheme funding—the Pensions Regulator's approach

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • DB scheme funding—the Pensions Regulator's approach
  • How does the Pension Regulator communicate its approach to DB scheme funding?
  • The Pensions Regulator's statutory objective in relation to scheme funding
  • Funding principles and themes developed by the Pension Regulator
  • Working collaboratively
  • Taking and managing risk
  • Long-term view
  • Balance between affordability and managing deficits
  • Balance between pension payments and dividends
  • Dealing with Brexit uncertainty
  • more

FORTHCOMING DEVELOPMENT 1: The March 2018 White Paper ‘Protecting Defined Benefit Pension Schemes—A Stronger Pensions Regulator’ identified concerns about a lack of accountability and clarity on what a good DB funding strategy is, thereby resulting in poor scheme funding and investment decision-making sometimes focused on the short term. The government therefore expressed the intention to legislate so as to require DB trustee boards to appoint a chair and for that chair to report on key scheme funding decisions to the Pensions Regulator (TPR), including how the funding standards are met and how the scheme funding objective is set in line with a long term funding objective. Reflecting this, the annual funding statement published by TPR in March 2019 also set out TPR’s expectation that trustees and employers of DB schemes should agree a long-term funding target. After a first failed attempt to legislate on these measures (through the Pension Schemes Bill 2019), the Pension Schemes Bill 2020 was reintroduced in Parliament on 7 January 2020. This 2020 Bill (which differs from its 2019 predecessor only in minor ways) will require DB trustees to have a ‘funding and investment strategy’ for the purpose of ensuring scheme benefits can be paid over the long term. That strategy is to be set out in a ‘statement of