A new code of practice for funding defined benefit pension schemes
12 December 2013The UK Pensions Regulator is consulting on a new draft Code of Practice on funding defined benefit pension schemes. This is required to reflect the Regulator's new objective to "minimise any adverse impact on the sustainable growth of an employer".
The draft Code promotes closer integration of funding and investment strategy with employer covenant strength. Trustees are urged to avoid funding and investment risk if any downside is not reliably covered by the employer's resources or contingent assets. This may seem unlikely to ease funding pressure for employers. Additional governance and advisory costs are expected.
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