The statement warns that a degree of caution must be used when liabilities are estimated, which “should not be compromised to make a recovery plan appear affordable”, and that schemes must be “treated fairly in relation to other creditors and equity providers and not disadvantaged”.

Chair of TPR, David Norgrove, said: “Where sufficient prudence has been built into funding targets, a sensible consideration about the length of the recovery plan and schedule of annual payments can occur. That’s the balance we need to strike to best secure member benefits for the long-term and to enable employers to play their part in the economic recovery.”

The statement, Scheme funding and employer covenant-prudence, affordability, applying flexibility through the economic cycle, says TPR has analysed the current regulatory framework and approach to scheme funding and has found it to be “adequately flexible” to manage these conditions. Technical provisions are the scheme-specific funding standard, which pension schemes must target and the regulator’s requirement is that they are set prudently.

The statement also addresses FRS17 issues, acknowledging that as it stands, the accounting rules are unlikely to represent an adequate level of caution. Risk margins are also looked at in terms of the assumptions used for setting technical provisions, which must take note of the extent to which an employer covenant can support them.

The industry has responded to the statement with mixed attitudes, with Watson Wyatt’s Rash Bhabra, head of corporate consulting, questioning why these statements continue to be issued. “Assessing the employer’s ability to stand behind the scheme is an increasingly important part of a trustee’s job, so the Regulator is right to draw attention to that. Besides that, you have to wonder why similar statements keep being re-issued every few months. Is it mostly employers or trustees who the Regulator thinks are not heeding its message?”

Neil Carberry, head of pensions policy at the Confederation of British Industry (CBI), added: “This emphasises the flexible approach the Regulator is taking to balancing affordability for employers with funding for pension schemes. It is vital that this message reaches trustees – one way to do this would be a temporary extension of the Regulator’s recovery plan trigger from ten to 15 years.”