The Pensions Regulator has published its corporate plan for the next three years, setting out its business strategy to meet its statutory objectives.
One of its key plans for 2007-2008 is to work alongside the Department of Work and Pensions (DWP) to reinforce the government’s aim of reducing the maximum length of time that can be taken to wind up a defined benefit scheme. A maximum timeframe of two years has been proposed.
Tim Keogh, worldwide partner at Mercer Human Resource Consulting, said: “[I guess] the history of this is there used to be no [time] limit. The regulator has been taking a gradually increasing interest in this over the last five years or so, but there are still some horror stories around of schemes that have been winding up for the last 10 years.”
However, where plans are wound-up due to an employer’s insolvency, he added that employers would probably be past caring about how long the process takes. He continued: ”Where the employer is winding up voluntarily, I don’t think the time taken to do it is probably a big influence in how they behave. I think a more common situation in the future will be that employers will have schemes where no-one is accruing any benefits but they don’t wind them up because it means they can defer paying for them a bit.”
The Corporate plan 2007-2010 also outlines the regulator’s other key priorities which include: strengthening defined benefit (DB) scheme funding by completing scheme specific valuations and ensuring agreed recovery plans for schemes with deficits; improving the governance of work-based pensions via a year-on-year improvement in the extent to which trustees demonstrate knowledge and understanding of government requirements, and reducing the risk to members of DC schemes through an increased understanding among trustees and those who run the schemes.
This will involve working with employers, trustees and advisers to ensure they fully understand its aims.
Tony Hobman, chief executive of the Pensions Regulator, said: “Our overriding goal is to meet our statutory objectives, working efficiently and in partnership with the regulated community, government and representative bodies. This plan will enable us to deliver against the statutory objectives and key challenges set out in our medium term strategy.”