TPR’s interim response to statement of strategy consultation released

TPR has made changes after receiving 55 responses to the consultation. Key comments raised included; the suggestion that a reduction or simplification in the level of detail required might be appropriate in some cases; a suggestion that some of the information being requested went beyond legal requirements; and the suggestion that more flexibility to capture specific scheme circumstances would be useful.

Updates have also been made to allow for the final version of The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 and the final draft DB funding code of practice.

The statement of strategy templates have been simplified to remove unnecessarily legal narrative and adjusted to be relevant to a wider range of schemes.

TPR has clarified the definition of a smaller scheme to be one with 200 members or fewer, excluding DC only members, fully insured members or those who are eligible for lump sum death benefit only.

A new category of “low-risk” schemes has been defined as those submitting under Fast Track and in surplus on a low dependency funding basis, those submitting under Fast Track where all member benefits have been secured with an insurer, or those submitting under bespoke having reached the relevant date and in surplus on a low dependency funding basis.

The requirement to submit cashflow information has been removed for all Fast Track and small schemes, and reduced for all other schemes. Cashflows for future service will no longer be required. Instead, open schemes are asked to provide salary and contribution rate information.

The options available for discount rate methodologies have been expanded and space for additional commentary added for some other assumptions.

Inflation sensitivity questions have been added to the data requirements.

Guidance has been provided to allow a pragmatic description of investment risk over the journey plan. 

The requirement to submit information about currency hedging has been removed.

The requirement to submit detailed covenant information has been removed for schemes that meet the definition of low-risk.

A more pragmatic approach can be taken when calculating covenant metrics, which may now be stated as “equal to or at least” or “equal to or no more than”.

For multi-employer schemes, trustees will be permitted to aggregate covenant data if they consider it appropriate for their scheme. Non-segregated, non-associated multi-employer schemes may be required to provide a summary of the trustees’ assessment of supportable risk as opposed to the employer cashflow format used by other schemes.