The Pensions Regulator has removed some of the data requirements in the new defined benefit strategy statements which had been criticised as disproportionate. TPR is also reminding schemes to refer to its new DB funding code, despite the new code not officially coming into force for about nine weeks.

New funding regulations have been in force since Sunday, while the DB code will not officially apply until late November. This gap is partly the result of the election timing and a requirement for the code to be laid in parliament for 40 days. The 118 schemes with effective valuation dates in the gap period have been advised to use the new DB funding code as the base for their approach and will receive correspondence from the regulator about this.  

As part of the new funding regime that has been in the making for several years, DB schemes must submit a funding and investment strategy statement. The regulator has now published its interim response to a consultation on the statements from March this year, simplifying the documents by removing some required details, and giving more flexibility in some areas, for example allowing trustees to describe their scheme’s long-term objective in free text rather than through a set of defined choices. It has also made a number of changes around the actuarial assumptions that can be used. 

“We have engaged extensively with industry in the development of our new DB funding code. Our expectations are now clear, and I hope trustees find the funding code guidance helpful as they navigate their way through either their first Fast Track or Bespoke valuation,” said TPR’s executive director of market oversight, Neil Bull. 

He added: “We’ve listened to feedback and reduced the data ask of schemes in certain situations such as for well-funded and small schemes. Now, ahead of the launch of a new digital submission platform in the spring, we’re giving schemes information to help them prepare in advance.”  

TPR is planning to launch its first scheme-facing digital service for submitting the DB statement and other valuation documents in spring next year. It is currently conducting user research with some trustees to pilot the new system.   

Those who want to submit a valuation before the system goes live can contact TPR for support, while the regulator will not regard schemes as being in breach of the regulations if there is a delay in the launch of its digital system that means there is a gap between preparation of the funding and investment strategy and submitting the strategy statement. Legislation requires trustees and scheme managers to submit their statement of strategy to TPR as soon as reasonably practicable after preparing their funding and investment strategy.  

The changes made in respect of strategy statements have been welcomed, after the industry had criticised what it considered a lack of proportionality.   

“Amidst widespread concerns the earlier proposals were disproportionate, inflexible and would be unduly onerous for schemes, we’re glad to see that TPR has taken that feedback on board,” said Laura McLaren, head of DB scheme actuary services at consultancy Hymans Robertson. 

 

She particularly welcomed the concessions TPR has made to schemes in surplus and those taking the Fast Track route, given the current positive funding environment. 

  

The changes have moved the dial “in the right direction”, she said, but added that completing the templates will still incur extra work, noting that example guides run to around 17 pages for Fast Track and 28 pages for Bespoke. 

 

“Trustees and sponsors will need to factor this into upcoming valuation plans, but at least now they have the certainty to meaningfully start to prepare.” 

 

Mark Tinsley, a senior consulting actuary at Barnett Waddingham, said: “While they perhaps could have gone further, the regulator has introduced several sensible easements that will reduce the burden of producing the statement for many schemes.” 

  

He agreed the statement will still be “a sizeable document that will require significant input from schemes”, and that it was therefore essential for the new digital service to deliver a streamlined approach to submitting the valuation results.   

 

What is your view on the new DB strategy statements?