The Pensions Regulator announced that it issued its first ever Financial Service Direction in the Sea Containers case. Sea Containers Limited withdrew its appeal against the June 2007 determination and now has a 30-day period within which to give financial support to two pension schemes, which originate from Sea Container Services Limited, its UK subsidiary.
Bolstered by the success of the two Financial Service Directions, the Pensions Regulator now proposes to use mortality assumptions as a funding trigger.
The Pensions Regulator has published a draft statement on the regulation of defined benefit pension schemes that sets out a new approach to looking at mortality assumptions. In the guidance the Regulator considers that for good practice assumptions must be evidentially supported and descriptions should be clear and transparent.
The NAPF are glad to see that the suggested mortality rates are scheme-specific. In addition they have suggested that some counterbalancing regulation should be included to make it easier to return surpluses if people do not live as long as calculated, or to give employers the option to increase newly promised pensions by less than inflation if life expectancy rises quicker than expected.
The approach is subject to industry-wide consultation, ending on 12 May 2008.