DB scheme funding: Regulator anticipated to publish draft statement of strategy for DB code in autumn

A spokesperson for the Regulator has said that the draft statement of strategy for the DB funding code of practice, alongside guidance, is "likely to appear in the autumn".

Speaking at the PLSA Investment Conference 2023, Fred Berry, a lead investment consultant at the Regulator, announced that the organisation and the DWP are currently working on updating the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2023, following industry concerns that the regulations appear a lot tighter than the code.

Berry indicated that many areas of concern have been addressed in the draft code itself, noting that the obligations set out in the code are "for the sake of both acknowledging existing good practicing risk management and encouraging others to adopt that risk management in a proportionate manner". He further commented that the Regulator is alert to not wanting to overburden the industry.

However, the WPC’s report on DB schemes with LDI investments, published on June 14, 2023, expresses two fundamental concerns with the new funding regime: firstly that the approach is not sufficient to allow open schemes to thrive and the second is that it will result in a “herding” of investment decisions. It recommends that DWP and the Regulator should halt their existing plans for a new funding regime, at least until they have produced a full impact assessment of its proposals, including the impact on financial stability and on open DB schemes.