The Pensions Regulator

Pensions Regulator announces new timetable for scheme funding code of practice

Ref: PN05-30
6 October 2005

In light of the Department for Work and Pensions' (DWP) announcement of the revised timetable for scheme funding regulations, the Pensions Regulator today announced changes to the schedule for its work.

The DWP regulations will now come into force on 30 December, and the regulator will publish the Funding defined benefits code of practice when the regulations are published. This is to ensure that the code accurately reflects the regulations. The specimen funding documents designed to assist trustees and their advisers will also be published in December.

The Pensions Regulator intends to publish its consultation document describing how it will operate in relation to the new requirements and how it will use its powers at the end of October 2005. This is to allow earlier discussion and clarity about how the Pensions Regulator will regulate scheme funding. Early publication of the document will help to inform trustees and employers about how the regulator plans to implement the new scheme funding regime.

As a result of the revised timetable for publishing the regulations, trustees beginning their valuation between 22 September and 30 December will now have an extra three months on top of the usual fifteen months, to complete their valuation and put in place an updated schedule of contributions.

All of the above documents will be available on a dedicated page on the Pensions Regulator's website at www.thepensionsregulator.gov.uk.

Editor's notes

1. The Funding defined benefits code of practice will be made available as soon as it is laid before Parliament in December.
2. The new scheme funding requirements are part of wider reforms set out in the Pensions Act 2004. Elements of the scheme funding provisions take account of the funding requirements in Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision
3. The regulations replace the minimum funding requirement (MFR) and will now come into force on 30 December 2005. The new requirements will apply to valuations based on an effective date of 22 September 2005 onwards but completed after 30 December 2005.
4. The Pensions Regulator issued a joint statement with the DWP on 1 September 2005 setting out an intention to publish the regulations and associated documents in October. The timetable for the regulations and the Code of Practice has now been revised to allow time to take account of further comments from the pensions industry on these highly detailed and technically complex regulations.
5. Codes of practice are not statements of the law. However, they do have evidential value, meaning they will be taken into account by a court or tribunal where relevant.
6. The Pensions Regulator has been established as the new regulator of work-based pensions in the UK, with wider and more flexible powers under the Pensions Act 2004. It has replaced Opra which no longer exists.
7. The new powers of the Pensions Regulator include the ability to:
8. • collect more detailed scheme information;
   • impose a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.