TPR publishes new funding code consultation

TPR publishes new funding code consultation

16 Dec 2022

Heidi Webster, Head of Scheme Funding at XPS Pensions Group, said: “TPR’s latest funding code consultation goes some way to providing reassurance to trustees and sponsors about the potentially prescriptive nature of the draft funding and investment strategy regulations proposed by DWP earlier this year. We hope that the regulations, once finalised, will reflect the level of flexibility included in this consultation. 
 
There was a concern that the regulations, as drafted, would drive overly low risk investment strategies, which could ultimately lead to longer term dependency on sponsors. However, TPR has confirmed that it may be reasonable for schemes to hold some growth assets at and beyond significant maturity. 
 
We remain concerned, however, about the large number of schemes that may already be at or past significant maturity, which as currently drafted is defined in the funding code as a duration of 12 years, in line with requirements set out by the draft regulations. Alternatives to the proposed duration approach are considered in TPR’s consultation. Trustees will need an approach which provides predictability for effective journey planning. 
 
We welcome TPR’s proposed approach that Fast Track (now a filter for TPR’s assessment of actuarial valuations) sits outside of the funding code, which means Fast Track is less likely to become the “default” strategy.