A decision by The Pensions Regulator (TPR) to avoid retrospectively changing pension scheme valuations based on longevity improvements has been welcomed.
The National Association of Pension Funds (NAPF) says the move could have proven costly to trustees who had already begun work on funding plans.
Originally TPR planned to apply new life expectancy assumptions for valuations due from March 2007.
But last week TPR announced changes will not apply until the beginning of the next defined benefit scheme valuation cycle starting in September this year.
Nigel Peaple, NAPF director of policy, says: “We welcome the decision to avoid the retrospective application of changes to the Regulator's expectations in this area.
“It would have been costly for trustees of pension schemes to revise valuation mortality assumptions where they had already started work on funding plans.
“This was one of the key issues we raised so we're pleased that the Regulator is listening to its stakeholders.”
The regulator issued a consultation in February this year seeking views on how it expects pension schemes to take account of future improvements on longevity. The deadline for responses was May 2008.
It suggested introducing changes applying to valuations due from March 2007, but TPR has decided against this option.
David Norgrove, chairman of the regulator, says: “The consultation has proved to be extremely useful.
“In order to ensure that we have the time to fully consider all of the responses, and to clarify that the original proposed date of introduction did not mean that schemes needed to restart valuation processes that had already begun, we have decided that any changes will be introduced from the start of the next valuation cycle.
“This will impact valuation dates from September 2008, with any necessary recovery plans due up to 15 months later in December 2009.”
More than 80 responses were received as part of the consultation. The regulator expects to publish its full response and the final version of its new approach later in the summer.
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