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聯絡: Jan Schapira
電話: +44 20 7178 3127

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UK
London, 21 July 2010

• Pension Regulator’s advice to trustees to explain effects of change to members is sensible
• However, arbitrary imposition of additional security on schemes should be avoided

The Pensions Regulator (TPR) has today published a statement to help trustees and employers manage the effect of the change in the statutory rate of pension increases from RPI to CPI. TPR has assumed that, since this change will generally result in reduced pension scheme liabilities, it would also result in shorter recovery plans and greater security for members.

Dr Deborah Cooper, Head of the Retirement Research Group at Mercer, commented: “The government's announcement to replace RPI with CPI as the measure to determine statutory increases will, in some cases, result in lower increases to pensions in future.

“Trustees should take this into account when considering how liabilities should be financed, and explain the consequences of this to members. However, it is not appropriate for TPR to attempt to impose additional security on schemes over and above what trustees consider is reasonable when carrying out their statutory duties, in agreement with sponsoring employers,” she added.

Notes for editors
The context of this change is that Trustees determine the degree of security that their scheme's assets should provide to members, in agreement with their sponsoring employer. Their funding target reflects the nature of the scheme's liabilities and its underlying assets, as well as the extent to which the trustees feel it is appropriate to rely on the strength of the company's covenant. If the liabilities fall in value, the trustees may prefer to rely less on the covenant and may take this into account when negotiating future funding with employers. However, there will be cases where trustees feel their level of reliance on the employer is appropriate, and a fall in the value of liabilities should result in reduced calls on the employer for contributions.

Access the TPR statement here.

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聯絡: Jan Schapira
Mercer Press Office
電話: +44 20 7178 3127