Engaging in scheme funding negotiations
Produced in partnership with Alison Fleming of PwC and Stuart Foreman of Capita
Engaging in scheme funding negotiations

The following Pensions guidance note Produced in partnership with Alison Fleming of PwC and Stuart Foreman of Capita provides comprehensive and up to date legal information covering:

  • Engaging in scheme funding negotiations
  • Purpose of scheme funding negotiations
  • How negotiations take place
  • Conflicts of interest
  • Timescales
  • The Pensions Regulator's approach to scheme funding
  • Key considerations in negotiations
  • Strength of employer covenant
  • Investment strategy
  • Assumptions used to measure the liabilities
  • more

THIS PRACTICE NOTE APPLIES TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES

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