The Pensions Regulator – new codes are still awaited…
The Pensions Regulator’s new General Code was expected in Spring 2023, but we are yet to see it. The new DB Funding Code, which will form part of the General Code, has been delayed until April 2024.
The General Code of Practice
The General Code will bring together the existing ten codes of practice together in one place. The Pensions Regulator anticipates that the new form will help schemes identify what the Pensions Regulator’s expectations are and how they are meeting them. There is a key focus on ensuring schemes have an ‘Effective System of Governance’ and for schemes with more than 100 members an ‘Own Risk Assessment’. It’s currently not clear when the finalised General Code will be published.
The DB Funding Code
The new DB funding Code has been delayed until April 2024 and underlying regulations remain in draft form. The key areas of focuses are long-term journey planning, including reducing reliance on sponsoring employers as schemes mature, as well as investment and risk management. There will be a requirement for schemes to take covenant advice, which the Pension Regulator expects to inform and influence the level of investment risk of schemes depending on where there are on the long-term journey plan.
The code will work alongside the Pension Regulators the twin track regulatory approach – fast track or bespoke. If schemes qualify for the fast-track option, there will be lower intervention and scrutiny from the Pensions Regulator. The bespoke option “offers trustees greater flexibility and scope to select an approach that suits the specifics of their scheme.”
Trustees of schemes that have valuation dates as at April 2024 should monitor for updates and any potential changes to the code or legislation.
The General Code and new FB Funding Code are still awaited; trustees and employers should be aware of the forthcoming changes and prepare for compliance as far as possible.