TPR publishes guidance on scheme security

The Pensions Regulator (TPR) has published final guidance for trustees to ensure there is adequate security for their pension scheme.

This follows consultation over the summer and provides information on what trustees should do to measure and monitor employer covenant – and any subsequent action that might be required to strengthen scheme security.

The guidance can be accessed on the TPR’s website:

The guidance also provides information on how arrangements such as contingent assets can work alongside employer covenant to provide further safeguards, though these will not be appropriate for all schemes. The recently published Purple Book showed a 16% increase in the use of contingent assets recognised by the Pension Protection Fund.

Bill Galvin, acting chief executive of the regulator said: “In setting funding strategies, trustees must make difficult judgments. They must assess the ability of the employer to make good funding deficits in the short-term, and they must set their long-term risk appetite in the context of the employer’s ability to underwrite adverse outcomes.

“This guidance will assist trustees in deciding what information and support they need to make these judgements. In a world where we are seeing greater complexity in sponsor-scheme arrangements, it will help them to engage proactively with the sponsor to increase their members’ long-term security.”

Len Fawke, head of Pensions Advisory at Begbies Traynor  and a former head of scheme specific funding at the Pensions Regulator, added: “Trustees are now left under no illusion about TPR's expectations of them in assessing and monitoring the employer's covenant"

The regulator has also published final guidance on DB multi-employer schemes and employer departures.

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