The Pensions Regulator

Scheme funding in the economic downturn – free national workshops

Ref: PN09-06
7 May 2009

The Pensions Regulator will hold free workshops throughout the UK this summer to reaffirm the approach to DB scheme funding in the economic downturn.

David Norgrove, chair of the regulator said: "These workshops are an opportunity for our regulated community to engage directly with the regulator as we continue to communicate openly in these difficult times."

Looking ahead to the workshops in June, chief executive Tony Hobman said:

"Now, more than ever, it is crucial for trustees to base their funding targets on prudent assumptions which take full account of the strength of the employer's ability to underwrite the risk. In particular, where an employer has a weak or weakening covenant, we expect trustees to ensure that this is reflected when setting the scheme's technical provisions. In some cases this will result in a higher funding target but trustees must not allow the current economic conditions to disguise the true cost of their scheme's liabilities.

Whilst remaining alert to the risks associated to a weakening covenant, we are looking for trustees to engage in positive and open dialogue with their sponsor about flexibility in their deficit recovery plans. We expect trustees to use the principle of reasonable affordability to set payment schedules.

The workshops are for those associated with defined benefit schemes and are designed to improve understanding of the issues surrounding funding in the current economic climate."

The workshops will include a consideration of technical provisions, recovery plans and type A events in the context of the challenging conditions facing employers and schemes. To draw out these issues, delegates will be invited to consider a sample scheme and employer engaging in different aspects of the DB funding process.

The workshops will be held at the following locations:

• Edinburgh - 03 June
• Manchester - 08 June
• Nottingham - 17 June
• Bristol - 19 June
• London - 22 and 23 June

To book your place or for further information, please visit www.livegroup.co.uk/thepensionsregulator where you will be able to register your place at your chosen venue. Places are limited so early booking is recommended.

Editor's notes

1. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:

• collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
• issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
• direct pension schemes as to how to calculate their liabilities and the contributions required;
• issue a contribution notice where there is a deliberate attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.