According to an IPE news report, the new funding rules will be effective October 31 instead of the originally planned September 23. The regulations – stemming from the new Pensions Act – had been expected to be in place in line with the timetable for implementing the European pension fund directive.
“The slight delay in publishing the regulations arises from the need to take account of the many issues raised by the pensions industry as a result of the extensive consultation the department undertook on draft regulations earlier this year,” the DWP stated (See UK Prepares for Pensions Act ).
The regulations will apply to any valuation completed after October 31 which is based on a date (known as the effective date of the valuation) on or after September 22. The DWP said that transitional arrangements mean that plans can move from the current minimum funding requirement to the new arrangements “in line with their normal three yearly valuation cycle”.
The new arrangements will require trustees to take actuarial advice before making funding decisions and to have in place a recovery plan where an actuarial valuation identifies a shortfall.
“When making scheme funding decisions, trustees should be better equipped to negotiate with the sponsoring employer after taking actuarial advice, and to ensure that an appropriate recovery plan is in place to meet any funding shortfall,” said Pensions Regulator chairman David Norgrove, according to the IPE report.