The Pensions Regulator – new codes are still awaited…
There is still no sign of the new Notifiable Events regulations coming into force. 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 focuses on the long-term journey planning of the scheme, investments and reliance on employers and will form part of the General Code, has been further delayed until April 2024.
New regulations will extend the notifiable events regime so that a wider range of events must be notified, and some events will need to be notified in advance to trustees and the Pensions Regulator, rather than after the event as at present. Although these changes are not yet in force, the Pensions Regulator has published a blog confirming it expects employers to behave as if they were – and it will take this into account when considering the exercise of its other powers.
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 a new requirement to produce an ‘Own Risk Assessment’.
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.”
Employers with schemes that have valuation dates as at April 2024 should monitor for updates and any potential changes to the code or legislation.
Although the Codes and Notifiable Events changes are still awaited employers should be aware that there is a regulatory focus on ensuring that trustees are involved in employer activity as soon as possible and on ensuring that schemes are being run effectively and that careful consideration is given to their journey plans, including reliance on employers.