Introduction

This code of practice applies to activities related to valuations with effective dates on and after 22 September 2024. For activities related to valuations with effective dates before 22 September 2024, refer to the 2014 DB funding code (PDF, 401kb, 51 pages).

1. This code of practice is issued by The Pensions Regulator (TPR), under the power given to us in section 90 of the Pensions Act 2004¹.
2. Our statutory objectives² are:
   • to protect the benefits of pension scheme members
   • to reduce the risk of calls on the Pension Protection Fund (PPF)
   • in relation to the exercise of functions under Part 3 of the Pensions Act 2004 only, to minimise any adverse impact on the sustainable growth of an employer³
   • to promote, and improve understanding of, the good administration of work-based pension schemes, and
   •  to maximise compliance with the duties and safeguards in the Pensions Act 2008⁴.
3. We have a number of regulatory tools, including issuing codes of practice, to enable us to meet our statutory objectives.
4. This code provides practical guidance on how to comply with legislation in relation to scheme funding. It applies to scheme valuations with an effective date on or after 22 September 2024.
5. The code does not cover all aspects of pensions legislation. Trustees will be expected to seek the help of advisers and look beyond this code to help them understand all their legal obligations.
6. The code is for trust-based occupational pension schemes providing defined benefits and is primarily for the scheme trustees and the scheme’s sponsoring employer. Certain aspects will apply to actuaries and other professional advisers will also find it of interest, including covenant and investment advisers.

Northern Ireland

7. In this code, references to the law that applies in Great Britain should be taken to include corresponding legislation in Northern Ireland. Footnotes in this code include the corresponding references.

Status of codes of practice

8. Codes of practice are not statements of the law and failure to comply with the code does not of itself make a person liable to legal proceedings.
9. However, The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 do provide for certain requirements to be set out by TPR, and it is therefore a legislative requirement that those provisions are followed. The parts of the code with a direct legislative underpin are clearly indicated where referred to⁵.
10. When determining whether relevant legal requirements have been met, a court or tribunal must take any relevant provisions of this code of practice into account.
11. In some scenarios there may be grounds for the regulator to pursue further action in the event of non-compliance with the requirements of Part 3 of the Pensions Act 2004⁶. We may issue a s13 improvement notice⁷, directing a person to take, or refrain from taking, such steps as are specified in the notice, or a s10 penalty notice⁸. We may also use our s231 power⁹ to:
    • modify future accrual;
    • direct trustees to revise the scheme’s funding and investment strategy, the method and assumptions to be used in calculating the scheme’s technical provisions and/or the recovery plan, and/or
    • impose a schedule of contributions
12. Directions in connection to the above may be worded by reference to a code of practice issued by us.

Terms used in this code

13. This code of practice sets out our interpretation of how to comply with relevant legislative requirements. Trustees may choose to follow an alternative approach to that appearing in this code of practice, provided they are satisfied that underlying legal requirements are met.
14. In this code we use the word ‘must’ when referencing legal duties.
15. Where we use the word ‘should’ or ‘expect’, or refer to our expectations, this indicates our view of good practice, rather than an express legal duty.
16. We use ‘need’ where the process is necessary to allow a scheme.

Legal references

¹ Article 85 of The Pensions (Northern Ireland) Order 2005

² Section 5 of the Pensions Act 2004 [Article 4 of The Pensions (Northern Ireland) Order 2005]

³ Part IV of The Pensions (Northern Ireland) Order 2005

⁴ Pensions (No. 2) Act (Northern Ireland) 2008

⁵ The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (SI 2024/462) [The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations (Northern Ireland) 2024 (SR 2024/90)]

⁶ Part IV of The Pensions (Northern Ireland) Order 2005

⁷ Section 13 of the Pensions Act 2004 [Article 9 of The Pensions (Northern Ireland) Order 2005]

⁸ Section 10 of the Pensions Act 1995 [Article 10 of The Pensions (Northern Ireland) Order 1995]

⁹ Section 231 of the Pensions Act 2004 [Article 210 of The Pensions (Northern Ireland) Order 2005]