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Trustees to be asked for more information on asset allocations from 2023

Ref: PN21-28

Issued: Thursday 21 October 2021

This press release has been updated to change a previous reference to ‘assets’ to ‘liabilities’.

From 2023, The Pensions Regulator (TPR) will ask trustees of defined benefit (DB) schemes for more information about how they allocate their assets.

This additional data, gathered from annual scheme returns, will assist TPR in assessing the investment risk of schemes and support the Pension Protection Fund (PPF) in its levy calculation.

The regulator has today published a consultation response Updating the asset information collected from defined benefit pensions schemes, following a consultation TPR conducted jointly with the PPF.

Information will be requested at three levels of detail, depending on a scheme’s PPF S179 liabilities. There will be a basic level required for smaller schemes (those with liabilities of up to £30m), with more granular information requested for schemes with liabilities between £30m and £1.5bn. Schemes with liabilities of £1.5bn or more will be expected to provide information on the sensitivity of portfolios to investment stresses.

David Fairs, TPR’s Executive Director of Regulatory Policy, said: “Protecting savers is our core priority and this additional data will give us a more detailed picture of how trustees are managing their members’ investments. It will give us an improved overview of DB funding whilst also flagging any potential concerns about a particular scheme’s approach to risk management.

“Recognising the burden on schemes as we emerge from the impact of the COVID-19 pandemic, we have decided not to ask trustees for this additional information until we issue our scheme returns in 2023.”

Most of the 29 respondents to the consultation supported the proposals, especially the need for schemes to provide more details on bonds, which make up around 70% of DB pension scheme assets.

To capture more accurately the level of risk within this large part of portfolios, scheme returns from 2023 will ask for bonds to be shown split into investment grade and sub-investment grade and, for some schemes, by duration. TPR expects better risk assessment to result in companies reducing the mismatch between assets and liabilities and to assist the regulator in focusing on schemes where the greatest risks to savers remain. This, in turn, is likely to result in fewer bad outcomes for savers.

TPR is now developing the necessary IT to enable the implementation of a new scheme return from 2023.

Notes for editors

  • The Pensions Regulator is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Matt Adams

Senior Media and Parliamentary Manager
01273 662086

David Morley

Media Officer (DB)
01273 662091

Out of hours

This is for journalists only with a media enquiry. The below number will divert to our on call media officer.
01273 648496

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