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The Pensions
Regulator (TPR) has decided to delay the introduction of changes
to the way longevity is treated in the scheme funding regime.
The announcement follows responses to TPR’s longevity consultation,
and the changes will now not apply until the beginning of the next
defined benefit (DB) scheme valuation cycle, starting in September
2008. The changes will impact valuations and follow-up recovery
plans that must be submitted to the regulator by schemes in deficit,
due from December 2009.
The consultation was issued in February 2008 seeking views on how
it expects pension schemes to take account of future improvements
on longevity. It had suggested introducing changes applying to valuations
due from March 2007.
David Norgrove, chairman of TPR, said: “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.”
The decision has largely been welcomed by the industry. Nigel Peaple,
NAPF director of policy, supported the decision, but warned: “It
is still important though that the absence of the long cohort mortality
improvement assumption is not used as a ‘trigger’ for
further regulatory scrutiny, as we have previously argued. We believe
doing so runs counter to the principle of scheme specific funding.”
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Pensions Age July 2008
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