The DWP’s suggested methods for smoothing assets and liabilities in pension scheme funding valuations would in many cases lead to higher deficits, the Association of Consulting Actuaries (ACA) has estimated in its response to the government’s call for evidence.

Instead the ACA stated that it would like to see greater flexibility within the current legislative framework being exercised by The Pensions Regulator in its approach to setting the discount rate. Such an approach may relieve pressure on some UK companies to divert cash from investment in their business and this would allow the degree of smoothing that sponsors and trustees are seeking, it stated.

ACA Pension Schemes Committee chair David Everett said: “We believe that the regime is flexible enough in concept. The issue is that The Pensions Regulator appears to have chosen to restrict the degree of flexibility within the legislative framework to a degree that the flexibility permitted in legislation is not available in practice.”

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