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Enhancing DB Strategy: Key Insights for Sustainable Growth and Regulation

This document outlines the current approach to defined benefit (DB) schemes, focusing on the regulatory code and strategy. It presents key messages from the consultation process, highlighting issues raised, transitional arrangements, and the importance of suitable funding strategies for employers and trustees. The emphasis is on sustainable growth, effective governance, and de-risking measures, with a view toward the future implications of the T9 regulatory framework. Ensuring compliance with the new objectives laid out for sustainable growth is crucial for all DB scheme stakeholders.

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Enhancing DB Strategy: Key Insights for Sustainable Growth and Regulation

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  1. DB code and strategy Fiona Frobisher

  2. Outline • DB strategy documents • Key messages of the code and regulatory approach • Issues raised in consultation • What happens next? • Key messages for tranche 9 schemes

  3. Current market New objective on Reflect 8 years of conditions - T9 sustainable growth regulation Annual funding Draft c ode of DB regulatory statement practice on strategy 2014 scheme funding DB funding Scheme Essential guide regulatory and funding to the code enforcement analysis T7/T9 policy Business engagement assessment Consultation response DB documents published on 10 June

  4. Strong, ongoing employers Best support for well - governed scheme Appropriate funding strategies Approach to the funding code Employers Successful business plans, support scheme Trustees Pay benefits as they fall due

  5. 9 key funding principles

  6. The regulator’s approach to regulating DB schemes

  7. Key issues raised in consultation Scale Risk indicators & FRI (BFO) Covenant long term De-risking Small schemes Sustainable growth plans

  8. Transitional arrangements and next steps • Transitional arrangements • Code expected to be made in Britain in July and in NI later on in the year. • Trustees and employers of all schemes should apply the code as far as is reasonable depending on where they are in the valuation cycle. • Be mindful of the key messages put out in the last few years. • We will take a pragmatic approach to looking at valuations. • Next steps Education Evaluation Implementation

  9. Key messages for T9 schemes • Annual Funding Statement • Draws on Code and Funding Policy • Trustees should form their own views on covenant • Funding risk is one of a suite of risk indicators • The same standards apply to all schemes irrespective of size • T9 valuations - challenging but manageable for most

  10. Further information • Consultation response, code, strategy, policy and BEA • Annual Funding Statement 2014 and supporting analysis http://www.thepensionsregulator.gov.uk/docs/db-annual-funding-statement-2014.pdf

  11. Questions?

  12. Responses to the consultation • 85 respondents • A wide spectrum of stakeholders • Broadly supportive • Many detailed comments

  13. Consultation key themes and our response – Code (1)

  14. Consultation key themes and our response – Code (2)

  15. Consultation key themes and our response – Regulatory approach

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