The Pensions Regulator (tPR) published its Annual Funding Statement 2022.
This statement is for trustees and sponsoring employers of occupational defined benefit (DB) pension schemes and is particularly relevant to schemes with valuation dates between 22 September 2021 and 21 September 2022 (known as Tranche 17, or T17 valuations).
This statement aims to:
set out specific guidance on how to approach valuations under current conditions; and
highlight tPR's views on general risk management practices, regulatory developments and current issues facing schemes, which are expected to have a bearing on pension scheme management.
In this statement tPR set out guidance to enable schemes to focus on certain aspects such as:
Considering how market uncertainties impact the employer’s covenant and the tPR expectations of scheme trustees.
Considering the impact on scheme assets and liabilities from the current high and rising inflation rate, as well as greater volatility in the investment markets.
Setting out tPR views on reasonable long-term mortality assumptions in the absence of sufficient evidence or a robust assessment of the long-term effects of COVID-19.
Highlighting, in the accompanying tables, the key risks tPR expects trustees and employers to focus on, and actions to take, depending on the scheme’s funding strength, maturity, and strength of the employer covenant.