29 July 2024
Janet Brown, partner at Sackers, comments:
“Marking the next step in the journey towards the new DB funding regime, TPR’s code of practice was laid before Parliament today. Several years in the making, the new DB funding regime will require schemes to produce a funding & investment strategy aimed at achieving “low dependency” on their sponsoring employer by the time they are “significantly mature”.
With the new funding regime confirmed as starting to apply to actuarial valuations with effective dates on or after 22 September 2024, but the funding and investment regulations in force from 6 April 2024, the publication of the code is a welcome sight at last. The news that the final draft code dovetails with essential changes built into the final regulations – including around trustees’ independence in investment decision making without restrictions and recognising the “unique characteristics of open schemes” with their own section in the code, noting they are able to take account of new entrants and future accrual – is also most welcome.
However, with the new DB funding regime’s implementation now less than two months away, the revised covenant guidance remains missing in action. With the suggestion by TPR of a consultation “in due course”, hopefully we will see this sooner rather than later with no surprises in it.
Finally, with TPR having also published its response to its Fast Track and regulatory approach consultation in time for the summer holiday get away (Fast or slow), trustees and sponsors will have plenty to digest in addition to the 102-page Code, whether their next valuation will be bespoke or Fast track.”
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