The U.K. government is proposing new rules requiring defined benefit pension plan sponsors to provide regulators with a summary of their investment strategies.
Under the proposed rules, which were announced by the Department of Pensions and Welfare, DB plans would have to submit long-term funding and investment strategies to the U.K.’s pension regulator. The rules would also give the regulator new powers to intervene if the proposed plans don’t provide adequate protections for plan members.
In a press release, Guy Opperham, minister for pensions, said it isn’t the government’s intention to dramatically increase the regulator’s scrutiny of DB plans. “Our intention is to have better — and clearer — funding standards, while retaining the strengths of a flexible, scheme-specific approach. It is neither one size fits all nor about micro-managing schemes. Every scheme will be treated on its merits.”
Before receiving a first reading in the House of Commons, the proposal will undergo a 12-week review period in which members of the pension sector can submit feedback. It has already received the approval of the regulator.
“I welcome the proposed measures, which will help trustees to focus on long-term planning and risk-management, reflecting the good practice that many well-run DB schemes already demonstrate and enable [the regulator] to regulate DB scheme funding more efficiently and robustly in the future,” said Charles Counsell, chief executive officer of the Pension Regulator, in the release.
The news comes during a period of instability for the British government. Earlier in July, Opperham was one of 62 ministers to resign from the cabinet in an effort to oust Prime Minister Boris Johnson. After agreeing to leave the position at the end of the summer, Johnson reappointed Opperham and most of his ministerial colleagues.
One of the two candidates remaining in the race to succeed Johnson, Rishi Sunak, chancellor of the exchequer, previously collaborated with the outgoing prime minister on a letter to the U.K.’s pension sector calling on plans to behave more like their Canadian counterparts.