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The scheme-specific funding regime

FORTHCOMING DEVELOPMENT: TPR is working on updating its guidance on assessing and monitoring the employer covenant. According to TPR’s updated guidance on climate change (published at the end of September 2022), this was expected to be published in late 2022, however this not occur.This updating work had previously been referred to in TPR’s Annual Funding Statement 2022, with TPR stating that the updated guidance would be published as part of its second consultation on the draft DB funding code. Despite the publication of the second consultation in December 2022, the updated employer covenant guidance continues to be awaited.However, in its first response to the first defined benefit funding code of practice consultation also published in December 2022 (alongside the second consultation on the on draft DB funding code), TPR did note that it would consult on the updated guidance on assessing and monitoring the employer covenant in 2023. However, this also did not occur. Among other things, the updated employer covenant guidance would include a section on how trustees and...

Statutory funding regime and the interaction with scheme rules

The Pensions Act 2004 funding regimeThe Pensions Act 2004 (PeA 2004) and the Occupational Pension Schemes (Scheme Funding) Regulations 2005, SI 2005/3377 (the Scheme Funding Regulations) introduced a new scheme-specific funding regime applying to defined benefit (DB) occupational pension schemes. This regime replaced the discredited Minimum Funding Requirement (MFR) and came into effect on 30 December 2005. It applies to actuarial valuations:•with an effective date on or after 22 September 2005, and•received by the trustees on or after 30 December 2005A key part of the scheme-specific funding regime relates to the introduction of a statutory funding objective which applies to all DB schemes unless they are exempted by the Scheme Funding Regulations.In brief, the statutory funding objective requires all applicable DB schemes to have ‘sufficient and appropriate assets to cover its technical provisions’, ie the amount required on an actuarial calculation to fund the scheme's liabilities.With effect from 6 April 2024, the Pension Schemes Act 2021 amends the statutory funding objective to ensure the calculation of the scheme’s technical provisions...

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Statement of investment principles (SIP) for defined benefit (DB) pension scheme

Statement of investment principles (SIP) for defined benefit (DB) pension scheme THE [insert name of pension scheme] PENSION SCHEME This statement of investment principles is effective from [insert date]. 1 Statement of investment principles 1.1 Purpose of statement This statement sets out the principles governing the decisions about the investment of the assets of the [insert name] Pension Scheme (the Scheme). This statement is issued by the Trustees of the [insert name] Pension Scheme (the Trustees) to comply with the Pensions Act 1995, s 35. 1.2 Review The statement will be reviewed annually. A special review may be undertaken at any time if the Trustees think that there has been a significant change in investment policy or any other circumstances affecting the Scheme. 1.3 Advice The Trustees have obtained and considered written advice on the content of this statement in a letter from [insert name of investment consultant or actuary]. [insert name] have confirmed to the Trustees that they are qualified by their ability in a...

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Tax weekly highlights—11 April 2024

This week's edition of Tax weekly highlights includes: (1) the Court of Appeal’s judgment in BlackRock Holdco 5 LLC v HMRC, (2) an amendment to the Stamp Taxes on Shares Manual to confirm the availability of the capital raising arrangement exemption from higher rate stamp tax, and (3) News Analysis on the Upper Tribunal (UT) decision in WTGIL Ltd regarding the concept of a supply for consideration for VAT purposes.

Pensions weekly highlights—4 April 2024

This week's edition of Pensions weekly highlights includes a review of key news stories, as well as dates for your diary and trackers.