UK – The UK government is consulting on defined benefit pension scheme funding ahead of the implementation of the EU occupational pension directive.
The Department for Work and Pensions has issued proposals to replace the Minimum Funding Requirement, to be in place in time for the September 23 deadline for implementing the directive on Institutions for Occupational Retirement Provision.
Under the planned requirements there will be a new statement of funding principles and the requirement for trustees to keep members informed about the funding of their schemes.
"This consultation will look at significant measures which will improve the arrangements for the funding of defined benefit pension schemes,” said pensions minister Malcolm Wicks said.
"Everyone is agreed that the old MFR regime needed improving upon and I believe these proposals will be positive for both trustees and scheme members."
Included in the new proposals are the statement of funding principles, the preparation of actuarial valuations and reports, and recovery plans to restore funding shortfalls.
And there are proposals for transitional arrangements allowing the smooth transfer of schemes from the MFR to the new scheme funding requirements.
Meanwhile, the Pensions Regulator has issued a draft code of practice on funding defined benefits. It sets out the standards of conduct and practice expected of trustees and (in some respects) scheme actuaries.
"The draft code of practice gives clear guidance for trustees of defined-benefit schemes on their responsibilities in relation to scheme funding,” said chairman David Norgrove.
“Trustees will be better equipped to challenge advice from their scheme actuary, and to ensure that an appropriate recovery plan is in place to meet any funding shortfall."
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