Disappointment over DB funding code delay

Confirmation of the code being pushed back until April 2024 will not come as a surprise to many in the industry. Research by independent consultancy Broadstone shows that almost all trustees (91 per cent) expected to hear this. 

Ample time for reflection

However, questions still remain over the burdensome nature of the code, especially for smaller schemes, said Broadstone head of policy David Brooks.

It will be interesting to see whether the regulations are also pushed back or whether it is only the code that is delayed.

David Brooks, Broadstone

“It is unclear what changes will be made following the latest consultation, which highlighted some issues around the level of regulatory pressure this could place on small schemes and the costs of running their scheme,” he said.

“It will be interesting to see whether the regulations are also pushed back or whether it is only the code that is delayed.”

LCP partner Jon Forsyth was similarly unsurprised by the news, but criticised another in a series of delays caused by the regulatory bodies.

It is, however, the latest in a series of delays, and unfortunately moves the new funding code down the trustee priority list yet again,” said Forsyth.

“We hope [the Department for Work and Pensions] in particular will use this extra time to reflect on the industry feedback in the regulations, and work with TPR to make them more consistent with the draft code. 

“We also hope for no further delays – though these are certainly possible given all the moving parts and process that must be gone through.”

TPR priorities 

Besides the delay, TPR outlined its other priorities for the year. These included its ongoing work with the Financial Conduct Authority and the DWP to develop a value-for-money framework. It will also increase attention on tackling scammers through the Pension Scams Action Group. 

The regulator will also “continue to embrace innovation, through areas such as assessing any collective defined contribution applications for authorisation and supporting schemes to prepare for connecting to pensions dashboards”, it said.

TPR chair Sarah Smart said: “A key theme in the plan is that we — working with our partners — expect schemes to provide good value for money. Those that can’t must improve or leave the market.

“We will continue to work closely with our partners and maintain a robust focus on our core activities that drive compliance with regulations.”

TPR’s recently appointed chief executive, Nausicaa Delfas, said: “We have a full and ambitious agenda for the benefit of millions of savers. 

“We will continue to focus on protecting savers’ money, enhancing the pensions system and, as we look to the future, helping to drive innovation in savers’ interests.

“To deliver our plan, we will continue to build our organisational and digital capabilities, deliver value for money, and work collaboratively with our regulatory partners and stakeholders in the wider pensions environment.”

Actuaries must improve their funding advice

But it was a report issued earlier in the week that said it is not only TPR that needs to be clearer about its intentions around the matter of pension funding. 

Actuaries must up their game when it comes to advising on funding, according to a report issued by the Institute and Faculty of Actuaries.

This was a key finding in the thematic review of on corporate pensions, entitled “Corporate pensions: actuarial advice given to pension scheme sponsors”. 

While the report found that most of the work it reviewed was of good quality, it also found that actuaries do not always fully explain the risks and uncertainties involved in advice provided on funding. 

This becomes especially important when the advice being given recommends a less prudent funding approach than the scheme actuary’s advice to the trustees.

Just who is responsible?

The review also highlighted an issue of responsibility, after a quarter of the submissions reviewed did not provide the name of the actuary who had prepared the advice. 

Further research showed that in these cases that omitted the actuary’s name, they took responsibility for their work in other ways. However, the Actuaries’ Code requires members to show clearly that they “take responsibility for their work when communicating with users”. 

The report found that simply naming the adviser would be a clear and satisfactory approach.

IFoA senior review actuary David Gordon said: “This has been a complex review across a wide range of advice both in terms of subject matter and style, and we found actuaries followed the principles of actuarial standards in their work. 

“This report allows us to support IFoA members by identifying specific areas where improved processes could be considered and point to examples of best practice to help inform their work.”

IFoA regulatory board lay chair Neil Buckley said: “We will review the report’s conclusions and consider whether to make any changes to IFoA standards and guidance. 

“We will also discuss the report with fellow regulators and other stakeholders as to whether any action outside the IFoA’s remit is warranted.”