UK Pensions Agenda — July 2014: issues affecting pension plans and plan sponsors
1. Regulator’s new funding objective in force from 14 July 2014 — from this date, the Pensions Regulator will have to minimise the adverse impact on the sustainable growth of a pension plan’s sponsoring employer(s) when exercising its scheme funding powers. This may lead it to adopt a more flexible approach to funding, as it encourages trustees to do in its new defined-benefit funding code of practice. Action: trustees and plan sponsors should have regard to the regulator’s new objective and the new code of practice in negotiations over funding and valuations.
2. Protection afforded to members with money purchase benefits on scheme wind-up may be reduced from 24 July 2014 — benefits under many pension plans that have historically been treated as money purchase benefits will be reclassified as defined benefits when the new statutory definition comes into force on 24 July 2014. Trustees should check if this affects any benefits under their plan, because if it does it will change the way in which those benefits have to be administered in future and it will reduce the protection afforded to affected members on a scheme wind-up. Action: trustees of plans with money purchase benefits need to determine whether those benefits will be reclassified as a result of this change in the law…
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