Sections

The Pensions Regulator

Codes of practice

Codes of practice

Code of practice 03
Funding defined benefits

Using the code

Rules of the scheme Effect of legislation
Trustees have, unrestrained by conditions, the power to determine the contribution rate and no other person has the power to reduce or suspend contributions. Trustees are required to consult the employer but the employer's agreement is not required.25
Trustees have, subject to conditions, the power to determine the contribution rate and no other person has the power to reduce or suspend contributions. If the conditions are satisfied, trustees are required to consult the employer but the employer's agreement is not required.26
The contribution rate is determined by, or on the advice of, a person other than the trustees or the employer (usually the actuary). Trustees must obtain the employer's agreement. They must take into account the recommendations of the other person on the method and assumptions for calculating the technical provisions and on the preparation of any recovery plan.27

If under the rules of the scheme the actuary determines the rate, then the actuary must only certify the schedule of contributions if:

  • where there are conditions, those conditions are satisfied; and
  • the rates shown are no lower than those the actuary would have provided for if the actuary had been responsible for preparing the schedule, the statement of funding principles and any recovery plan.28

25 See paragraphs 9(1) to 9(3) of Schedule 2.
26 See paragraph 9 (1) to 9(4) of Schedule 2.
27 See regulations 5(3)(b) and 8(2)(e). The Pensions Regulator must also take into account this other person's recommendations when exercising any of its Part 3 powers, see section 231(2) and regulation 14(1).
28 See paragraphs 9(5) to 9(7) of Schedule 2.