The Chancellor has confirmed in his Budget that the Pensions Regulator (TPR) will be given a new statutory objective.
The new objective will ensure an employer’s need for sustainable growth is considered during scheme funding negotiations and is properly reflected in trustees’ dealings with the employer.
TPR will now begin work to revise its Code of Practice on Funding Defined Benefit Scheme. This will allow TPR to support trustees and employers to make use of the full flexibility of the Scheme Specific Funding regime in their negotiations.
The Department for Work and Pensions and Her Majesty’s Treasury, along with TPR, will review this in six months.
Minister for Pensions Steve Webb said:
The best guarantee of a pension scheme keeping its promises is to make sure that the sponsoring employer prospers. This new objective for the Pensions Regulator will help ensure that trustees and employers have the flexibility to come up with plans which deal with pension scheme deficits and benefit both scheme members and firms.
The DWP’s call to evidence on asset and liability smoothing did not reveal a strong case for changing legislation to permit smoothing. The Government will therefore not be pursuing this measure.
Notes to editors:
- The Budget statement can be found: http://www.hm-treasury.gov.uk/budget2013.htm
- The exact wording of the new objective will be set-out in legislation, which DWP will publish later this Spring.
- Following a consultation it has been decided that companies undergoing valuations of their DB pension deficits will not be allowed to smooth the calculation of their asset and liabilities.