7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• New DB funding code laid in Parliament
• Court of Appeal upholds High Court’s Virgin Media decision on failure to obtain a s37 confirmation
• TPR updates its DB superfunds guidance

New DB funding code laid in Parliament

On 29 July 2024, the new DB funding code was laid in Parliament. The code is aimed at trustees, sponsoring employers and advisers, and sets out practical guidance for complying with the new funding and investment strategy (“F&I Strategy”) requirements. The new regime will require DB schemes to have an F&I Strategy aimed at achieving “low dependency” on their sponsoring employer by the time they are “significantly mature”.

Having previously consulted on the draft code (see our Alert for details), TPR has updated the final version for changes made to the regulations.

TPR has also published responses to its consultation on the code and its regulatory approach. As regards the statement of strategy consultation published in March this year, final guidance is now expected “in the autumn”.

The new funding and investment requirements are due to apply to valuations with effective dates on or after 22 September 2024. The new code must be laid before Parliament for 40 days before it comes into force, at which point it will replace TPR’s existing DB funding code.

See our Alert for further details.

Court of Appeal upholds High Court’s Virgin Media decision on failure to obtain a s37 confirmation

Following an appeal on a limited issue, the Court of Appeal has upheld the High Court’s 2023 decision. In summary, based on the relevant legislation at the time, a written actuarial confirmation was required where an alteration to a scheme’s rules affected pension benefits attributable to past or future service benefits related to section 9(2B) rights. Without such a confirmation, an amendment would be void.

It is possible that the DWP might exercise its power to make regulations to validate such changes. This could help address some of the issues faced by trustees and employers in relation to imperfect records of historic scheme documents, and the industry has already asked for such legislation to be considered.

See our Alert for details of the case and the wider implications for schemes which were contracted-out on a DB basis on or after 6 April 1997.

TPR updates its DB superfunds guidance

On 26 July 2024, TPR announced it has updated its DB superfunds guidance. The guidance was reviewed and updated last year, but further changes were expected in relation to how superfunds can extract profit.

This latest update, intended to support “innovation, while retaining protection for scheme members”, states that capital can be released up to twice a year where a specific trigger and safeguards are met. The previous version of the guidance only allowed capital to be released when benefits were bought out.

The revised guidance also sets out that standard capital adequacy requirements for a superfund may now be relaxed where a pension scheme’s sponsoring employer becomes insolvent and the scheme is unable to afford the full buy-out of benefits, provided other conditions are met, including that the trustees are confident the transaction is in members’ best interests.