In September the Pensions Board again revised the timeframe for defined benefit schemes with funding deficits to submit funding proposals to the Board. This will allow trustees additional time to fully explore all options available to address scheme funding deficits. The Board has stated that it expects there will be no lessening of the efforts by trustees to resolve scheme deficits as a result of the additional time.
The requirement for defined benefit pension schemes to provide for a “risk reserve” takes effect from 1 January 2016. The reasoning behind this move is that in requiring schemes to hold additional assets in excess of those required by the previous funding standard, an additional level of protection against future instability in financial markets is created. Schemes that do not meet the requirement to hold the reserve will be obliged to put in place a recovery plan.
Statutory guidance has recently been issued by the Pensions Board in respect of this area and is available on the Pensions Board website.