Funding

Funding

FORTHCOMING DEVELOPMENT: The Pensions Regulator (TPR) is working on updating its guidance on assessing and monitoring the employer covenant. This was initially expected to be published in late 2022, but was repeatedly delayed. On 29 July 2024, TPR published the final DB funding code, together with the second response to the draft DB funding code of practice consultation, in which TPR said that it is set to consult on updated covenant guidance to further support trustees ‘in due course’. This work will focus on the main areas that trustees must consider when assessing the employer covenant under the DB funding code. These areas include employer cash flows, prospects, contingent asset support, and the reliability and covenant longevity periods. Guidance will also be included on the maximum affordable contributions and affordability for recovery plan purposes. Previously, TPR also stated that the updated employer covenant guidance would include a section on how trustees and their advisers could consider climate-related risks and opportunities as part of their assessment of covenant. TPR also intend to provide more detail on how to treat guarantees for scheme funding purposes and outline various examples

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