News: Defined Benefit Funding Code of Practice Consultation
With cash bleeding from corporate profit and loss accounts, life has moved on since The Pensions Regulator first aired its two options for raising standards on defined benefit scheme funding. We need to raise standards but we also need a ‘cut the crap’ option for weak and weakening small and medium sized companies. If they are paying all they can afford in deficit contributions there is no sense in the scheme spending tens or hundreds of thousands of pounds on the complex work needed to comply with the Regulator’s bespoke route. We are urging a pragmatic third option of ‘Fast Track Lite’ for trustees and sponsors in this difficult position. The third approach would have the same ‘Fast Track’ principles but with a more realistic approach to confirming the maximum level of affordable contributions.
In terms of next steps, we don’t get any sense that The Pensions Regulator will be in a hurry to push through new onerous funding regulations when the economy is in such dire straits. The regulator will also be sensitive to the weekend’s news on how the government plans to pay for the furlough scheme. We hope the next stage of the consultation to improve standards includes a more pragmatic option for weaker companies but we do not expect to see anything until later next year while the changeable politics of the pandemic are navigated.
See Isio's letter here.