The Pensions Regulator

The Pensions Regulator releases scheme funding modules of Trustee Toolkit

Ref: PN06-30
16 August 2006

Two new modules ‘How a defined benefit scheme works’ and ‘Funding your DB scheme’ are now available online as part of the Pensions Regulator’s free e-learning programme for pension trustees www.trusteetoolkit.com

These are aimed at trustees of defined benefit schemes. The regulator will release a module covering scheme funding and investment choices, specifically for trustees of defined contribution schemes, later this year.

In ‘How a DB scheme works’ trustees learn how benefits accrue, how they are calculated and what trustees should consider if a scheme is in deficit. They also consider the employer covenant and how to recognise when the employer’s willingness and ability to meet pension liabilities might be at risk.

The ‘Funding your scheme’ module covers the implications of the requirement to meet the statutory funding objective, different ways to measure liabilities and the funding position of the scheme. The learner has to decide on the assumptions they will use to measure the funding position and has the opportunity to play with interactive graphics to see the effect of amending those assumptions.

Regulated community learning manager Terry Clayworth said:

“These modules will enable trustees to understand fully how calculations are made and how they should set about selecting assumptions and methods for those calculations. It will give them confidence when approaching their new responsibilities under the Pensions Act 2004.

“The scenarios have been designed to help trustees participate in similar decisions to those they will have to face in their own schemes.”

The regulator will release a further funding module, again specifically for trustees of DB schemes, later in the year. This will help trustees get to grips with:

• their responsibilities when negotiating with employers;
• the methods for calculating technical provisions;
• designing and proposing a recovery plan;
• setting the contribution rate for future service;
• preparing a statement of funding principles;
• strategic asset allocation; and
• how to engage in strategic asset allocation their own schemes   

The Trustee toolkit was developed in response to the trustee knowledge and understanding requirements of the Pensions Act 2004, and is designed to help trustees comply with the new legislation.

Completing the e-learning programme will provide, for the majority of trustees, a convenient way to bring their knowledge and understanding up to date in a way that also encourages them to become familiar with their own scheme.

For immediate registration visit: www.trusteetoolkit.com

Editor's notes

1. The Pensions Act 2004 (sections 247-249) requires trustees to have knowledge and understanding of the law relating to pensions and trusts, and the principles relating to the funding of occupational schemes and the investment of scheme assets. They must also be conversant with their own scheme's policy documents.
2. The code of practice on trustee knowledge and understanding is now in effect. This helps trustees to comply with the requirements and can be found, along with additional guidance for trustees, on the regulator's website at www.thepensionsregulator.gov.uk/trustees.
3. The Trustee toolkit syllabus has been based on 'Scope guidance' available on the regulator's website, and also forms the basis of a new voluntary qualification for trustees launched by the Pensions Management Institute. This new voluntary qualification will replace the current Trustee Certificate offered by the Pensions Management Institute.
4. The Pensions Regulator is the regulator of work-based pensions in the UK, with wide ranging and flexible powers under the Pensions Act 2004.
5. The powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.
   • The Pensions Act 2004 also imposes a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator.