Methods of valuing pension liabilities and related funding concepts
Produced in partnership with Tyron Potts of Barnett Waddingham LLP

The following Pensions practice note produced in partnership with Tyron Potts of Barnett Waddingham LLP provides comprehensive and up to date legal information covering:

  • Methods of valuing pension liabilities and related funding concepts
  • Valuing pension liabilities in respect of past and future service
  • Determining the value of benefits in respect of past service
  • Determining the value of benefits in respect of future service
  • Assumptions
  • Valuation methods
  • Scheme-specific funding valuation
  • Solvency valuation
  • Sections 179 and 143 valuations
  • Section 75 valuation
  • More...

Methods of valuing pension liabilities and related funding concepts

FORTHCOMING DEVELOPMENT: TPR is working on the design of a new code of practice for the funding of DB schemes, which will provide clearer funding standards and implement measures introduced in the Pension Schemes Act 2021, including the requirement for a long-term funding strategy.

On 3 March 2020, TPR published its first consultation on the revised DB code of practice, which focuses on the principles behind the new code. TPR proposes a ‘twin-track’ compliance approach to how it oversees the funding arrangements of DB pension funds. Schemes that can provide required information on investments and risks up-front will be put through a ‘Fast Track’ approach to regulatory sign-off of their funding arrangements. For those who cannot meet Fast Track guidelines, or choose not to, there will be a Bespoke approach which will offer more investment flexibility. However, trustees will have to submit more supporting evidence on this approach, including how they propose to manage additional risk, and may receive greater regulatory scrutiny.

On 14 January 2021 TPR published an interim response to the March 2020 consultation which outlines that, while there was general support for the principles and regulatory approach proposed in the consultation, there were also some concerns on how the principles would be applied in practice through the proposed twin-track
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