The Pensions Regulator has just published a consultation paper explaining how it plans to regulate the new scheme funding requirements due to come into force by the end of December 2005.
The Regulator says that it will focus on those schemes which present the greatest risks and it is more likely to scrutinize schemes with weaker technical provisions and longer recovery plans. To this end it has developed triggers to enable it to identify schemes which it needs to take a closer look at.
The first trigger is based on a scheme’s funding position. The Regulator will look at a scheme’s funding position under FRS17 and on the new PPF valuation basis and compare these with the full buy out cost for the scheme. It will then consider whether the percentage of the buy out cost covered on these bases is appropriate in comparison with typical schemes. The Regulator recognizes that there is considerable variability in these figures depending on scheme circumstances and may use different
