THE PENSIONS REGULATOR
Synopsis: The Pensions Regulator has published its 2015 annual funding statement.
Date posted: Friday, May 29, 2015
The Pensions Regulator has published its 2015 annual funding statement, setting out its analysis of current market conditions and how sponsoring employers and trustees of defined benefit (DB) pension schemes can agree appropriate funding plans which protect members’ benefits without undermining the sustainable growth of the employer.
The statement acknowledges that many schemes are likely to experience larger deficits than at their last triennial valuation due to changing market conditions.
Schemes with capacity to take additional risks should be able to address higher deficits through appropriate changes to their funding strategy – such as a modest extension to their recovery plans, a modest increase in deficit repair contributions and/or changing their assumptions relating to investment returns.
Other schemes with less capacity to take risk should seek higher contributions with a view to maintaining the same recovery plan end date – where this is affordable to the sponsor without adversely impacting its plans for sustainable growth. Where constrained affordability results in lower deficit recovery contributions than trustees think the scheme needs, they should maintain a higher level of due diligence and put in place strategies for managing the risks to the scheme.
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