Comment on the Funding Code announcement in TPR’s 2022-24 Corporate Plan

Commenting on the Funding Code announcement in TPR’s Corporate Plan published today, Laura McLaren, Partner, Hymans Robertson, says:

"TPR’s announcement today that it will launch its second consultation on the Funding code in the Autumn and clarity that changes won’t apply to valuations before 30 September 2023 is helpful. Despite this, however, pension schemes which are due valuations before then will have the challenge of navigating some ongoing regulatory uncertainty. This may run the risk of stifling decisive action from trustees and sponsors in the meantime but we’d hope that most schemes already looking ahead to the changes.

"Although trustees and sponsors are waiting for the long-awaited final detail to emerge later this year, tomorrow’s new laws are today’s best practice. It makes very little sense to agree a funding framework in 2022 or 2023 without understanding how it’s likely to work with the new code in 2025 / 2026.

"Indeed, whether driven by the new funding code or the maturing of DB schemes, a focus on the long-term funding and investment strategy has never been more important. We’re seeing many trustee boards already planning ahead for the requirement to formalise a long-term objective and looking to align that with a preferred endgame destination. With improved funding and insurer pricing, combined with the maturing of liabilities, schemes are finding they may be closer to endgame than expected. It’s important to start planning for that now."