DWP Updates Funding and Investment Strategy Regulations

The DWP has published an updated draft of the Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (the “Regulations“) replacing the draft published on 29 January 2024. The updated Regulations clarify previous ambiguity in the timing of the changes being made. The new funding regime will apply to all actuarial valuations with an effective date on and after 22 September 2024.

The Pensions Regulator has also announced this week that the new defined benefit funding code of practice will be published in the summer.

In this Pensions Note, we look at the key changes being introduced and what steps trustees and sponsors should now take to prepare for the new funding regime.

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New Pensions Regulator Guidance on Private Market Investments

The Pensions Regulator has published guidance for trustees regarding investment in private markets. This guidance follows on from the Government’s Mansion House reforms, announced last July and reconfirmed in the Autumn Statement, which are intended to ‘enable our financial services sector to unlock capital for our most promising industries and increase returns for savers, supporting growth across the wider economy’.

The guidance:

  • Provides an overview of the types of private market assets and how the markets can be accessed;
  • Highlights some of the key opportunities and risks when investing in private markets;
  • Reminds trustees of their legal duties when investing, including that they must predominantly invest in investments traded on regulated markets and maintain a diverse portfolio;
  • Sets out key considerations for trustees – which includes that the trustees have the right knowledge and understanding of private market investments before investing – and the different considerations for defined benefit and defined contribution schemes.

Please click the link below to access the guidance:

https://www.thepensionsregulator.gov.uk/en/document-library/scheme-management-detailed-guidance/funding-and-investment-detailed-guidance/private-markets-investment

Please contact us if you would like to discuss any of the issues highlighted in the guidance.

Michael Aherne
Michael Aherne
Partner, Pensions, London
+44 20 7466 7527

Mark Howard
Mark Howard
Of Counsel, Pensions, London
+44 20 3692 9672

Corporate sponsors put on notice as Government confirms plans to strengthen the Pensions Regulator’s powers

On Monday, in its response to the consultation on protecting DB pension schemes and strengthening the Pensions Regulator, the Government confirmed its plans to:

  • introduce a new criminal offence of wilful or reckless behaviour in relation to a defined benefit (DB) pension scheme (aimed at company directors)
  • give the Pensions Regulator the power to issue fines of up to £1 million in these circumstances and for other breaches by corporate sponsors of their pensions obligations
  • require corporate sponsors to notify trustees and the Regulator about proposed corporate transactions and re-financing and how they plan to mitigate any detriment to the pension scheme, and
  • make changes to the Regulator’s existing anti-avoidance powers to make it easier for the Regulator to impose Contribution Notices and Financial Support Directions on corporate sponsors and on connected and associated parties.

These changes come in response to high profile corporate failures involving the likes of BHS and Carillion. Corporate sponsors need to take note of these new powers and the new notification requirements, particularly as the Pensions Regulator is adopting a tougher and more proactive approach to its oversight of DB schemes and its enforcement activity against corporate sponsors. Continue reading

Five reasons to read (and respond to) the DWP’s Consultation Paper on defined benefit (DB) scheme regulation

In the first of what will likely be a number of consultations following the Government’s White Paper, “Protecting Defined Benefit Pension Schemes”, the Department for Work and Pensions (DWP) has launched its consultation on extending the Pension Regulator’s enforcement powers and the notifiable events regime (available here).  Should the proposals be introduced as currently outlined, they would place a significant new burden on companies with defined benefit pension obligations in the context of corporate activities. Continue reading