Albeit tPR’s initial response to the DB Funding Code Consultation is highly indicative of tPR’s approach to the DB funding code, the interim response understandably does not cover all points in detail. The detail will come after the second consultation, which is due to start later in 2021. This may create some challenges for schemes that will need to carry out valuations before that extra guidance is provided. Most schemes in this position might therefore decide to carry out any valuations during this period based on current principles. At the same time there may need to be consideration as to the extent to which those valuations should allow for the likely themes in the new Code.

The key points/issues raised in the consultation for the tPR’s approach were as follows:

  • proposed Fast Track guidelines for open schemes
  • risks associated with where Fast Track guidelines would be set (such as schemes “levelling down” and possible increases in costs of DB pension provision)
  • potential loss of flexibility (e.g. through benchmarking the Bespoke route against Fast Track)
  • an increased evidential burden when submitting a Bespoke valuation
  • the Bespoke route being perceived as second best
  • what a greater trustee focus on covenant visibility will mean for schemes’ ability to rely on covenant beyond the medium term.

The response appears to accept that the Fast Track should take into account COVID and Brexit considerations.