Paul Houghton welcomes news from the Pensions Regulator

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The Pensions Regulator (TPR) issued its latest annual funding statement on Tuesday, 5 March - aimed at Defined Benefit (DB) schemes with valuation dates between September 2018 and September 2019. Paul Houghton, Head of Actuarial Consulting at Barnett Waddingham, welcomes the regulators message.

Paul Houghton, said; “The Regulator’s message couldn’t be any clearer. Before shareholder dividends are favoured over fixing pension scheme deficits, the Regulator expects trustees to have agreed a strong funding target and a short recovery plan. In the most stressed cases, TPR expects “payment of shareholder distributions to have ceased”. The consequences of not doing so will only become more tangible as TPR’s powers are expanded. 

"The Regulator’s message couldn’t be any clearer. "

“With the Government intending to legislate so schemes are required to set a Long Term Funding Target, TPR is also giving a definite steer as to how its revised Code of Practice will reflect trustees’ new obligations. DB scheme trustees should therefore take note that, if in the midst of a funding valuation, the Regulator expects to see them initiate discussions with scheme sponsors even before the updated legislation is laid. At the same time it would be judicious for trustees, working with their advisers, to assess their scheme’s maturity and risk profile, so they may figure out where they sit within TPR’s risk matrix – and therefore understand fully what the Regulator expects.

“Moreover, TPR has made it abundantly clear that trustees will be asked to provide evidence that their shorter-term strategies are aligned with their long-term objectives – or be prepared to explain why not.

“There is nothing new or surprising in today’s statement – it is consistent with the messages TPR has been giving to the pensions industry since the publication of the White Paper in early 2018 and the strategic long-term approach to running pension schemes very much tallies with the way we operate at Barnett Waddingham. Nevertheless we look forward to working with TPR and the Department for Work and Pensions in improving the DB funding regime so employers, trustees and members have an even better idea where they stand.”