TPR sets out guidelines for defined-benefit recovery plans
By Alex Steger
Pension trustees need to ensure that recovery plans for defined benefit schemes running at a deficit are not detrimental to employers, according to The Pensions Regulator (TPR).
In its ‘Defined benefit annual funding statement 2013’ TPR said trustees’ recovery plans for schemes running at a deficit needed to set appropriate contribution levels which should consider what would be ‘reasonable affordable for the employer’. [EXPAND Read more]
It said: ‘Where there is tension between the need for scheme contributions and for investment in the employer’s business, it is important that the solution found neither damages the employer’s covenant nor benefits other stakeholders at the expense of the scheme.’
‘For some employers it may be reasonable to make increases, perhaps as a result of improvements in business performance, without damaging any future plans that grow the covenant to the scheme.
‘Where there are significant affordability issues trustees may need to consider whether it is appropriate to agree lower contributions and this may also include a longer recovery plan.’
TPR’s guidelines follow the Budget 2013 in which George Osborne proposed to give TPR the additional statutory objective to support defined benefit schemes’ funding arrangements taking into account employers’ future growth. [/EXPAND]