Budget 2013: The government has tasked The Pensions Regulator (TPR) with a new objective to support defined benefit (DB) pension scheme funding arrangements, which are compatible with sustainable growth for the employer and fully consistent with 2004 funding legislation.
The precise wording of the new objective will be set out in legislation that the Department for Work and Pensions (DWP) will publish later in spring 2013.
The implementation of the objective will be subject to review after six months, and TPR will revise its code of practice to reflect the new objective as soon as possible in 2013.
The government is also consulting on a new growth duty for non-economic regulators and is attracted, subject to the results of the consultation, to applying such a new duty to TPR.
Michael O’Higgens, chairman of TPR (pictured), said: “In light of the government’s proposal for a new objective to take account of the sustainable growth plans of the sponsoring employer, we will make the changes required, building on the 2004 funding regime, as part of a review of the code of practice for defined benefit funding that we will launch as soon as possible this year.
“In addition, we will shortly publish an annual funding statement, which will set out our guidance to trustees in the context of current economic circumstances, including the flexibilities available to trustees and company sponsors in the current regime, particularly the freedom to choose the basis on which contribution levels and valuations are calculated.
“We will engage fully with stakeholders and the industry on both the revision of the code of practice and the next annual funding statement.”
Joanne Segars, chief executive at the National Association of Pension Funds (NAPF), added: “We have long been calling for a new statutory objective for The Pensions Regulator to help secure the future of pensions, so we are pleased with today’s announcement.
“We back the broader focus of the objective and look forward to seeing more detail. The new objective needs to strike the right balance between protecting savers’ interests, helping good defined benefit pensions remain open, and ensuring pension regulation does not hinder investment and growth. We will be keeping a close eye on how the regulator meets this new goal.”