UK - The UK’s Pensions Regulator (TPR) is to publish guidance on how schemes should address imminent valuations and the recovery plan process, in the wake of industry pressure to account for the impact of quantitative easing on gilt yields.

Speaking at the National Association of Pension Funds (NAPF) conference in Glasgow, the regulator’s executive director of defined benefit (DB) regulation Stephen Soper said guidance would be published in April.

He said the scheme-specific funding regime imposed by TPR had, over the past four years, struck the balance between protecting pension funds while being “affordable and reasonable” for sponsors.

Soper added that, in light of the recent economic climate, the regulator would publish its expectations for trustees about to undergo the valuation process.

“By publishing a contemporaneous statement in this way, it is also our hope that when we start to receive recovery plans for this group of schemes, fewer will require in-depth scrutiny or challenge from us,” he said.

Employer representatives welcomed the emphasis on affordability in funding negotiations, while the NAPF said it was a positive step to take account of the impact of QE2, announced by the Bank of England last year.

The organisation’s director of policy Darren Philp said he hoped guidance went far enough to assist trustees with the challenges they faced.

“With the possibility of more QE ahead, things could get even more difficult for pension funds,” he said. “Inadequate action from the regulator will push more final salary schemes towards closure.”

Jim Bligh, head of pensions policy at employer lobby group CBI, said it was important to know in the current climate that pension funds would not “harm” a company’s ability to grow the business.

He welcomed the regulator’s emphasis on affordability in funding negotiations.

“Ultimately, the best form of protection for scheme members’ benefits is having the backing of a solvent employer,” he said.

The NAPF has repeatedly called on the regulator to take account of QE2’s impact on funding, saying the measure had many “nasty” side-effects and amounted to “torture”.

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