Pension trustees, employers and advisers are being warned they need to be prepared for scheme funding requirements which come into force next month.
Speaking at the National Association of Pension Funds Trustee (NAPFT) conference in London, the Pensions Regulator's strategic development director Charlie Massey has warned trustees to take, and actively question, actuarial and other advice.
"Actuaries will need to ensure trustees are aware of options, prepare periodic valuations and reports and certify calculations and schedule of contributions. And employers will need to keep trustees informed," he adds.
Funding requirements for defined benefit occupational pension schemes, from Part 3 of the Pensions Act 2004, come into force on 31 October 2005. A publication explaining how the Pensions Regulator intends to monitor compliance with the new legislation, its powers, when it may intervene, and what action it may take in certain situations, will be issued as a draft for public consultation in October.
Under the new arrangements trustees will be required to take actuarial advice before making funding decisions and have in place a recovery plan where there is a shortfall. Schemes should start preparing now in order to meet these requirements, says Massey.
"Trustees should think about planning to ensure that, within 15 months of the effective date of valuation, the key issues are finalised: a statement of funding principles, a recovery plan and a schedule of contributions."
To help trustees meet the requirements set out in the 2004 Pensions Act the Pensions Regulator is developing a free e-learning programme comprising a series of stand-alone modules designed by e-learning and pensions experts. Units one and two of the syllabus, the responsibility of trustees in relation to trust law and pensions law, will be available in January 2006.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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