Flexibility must be at the heart of the new defined benefit pensions funding code

The CBI has responded to The Pensions Regulator’s consultation on changes to the defined benefit (DB) funding framework. The framework provides practical guidance to trustees and employers of DB schemes - a workplace pension based on an employee’s salary and length of time worked - on how to comply with the scheme funding requirements. The consultation focuses on draft principles and options for the new code, with a second consultation on the draft text for the code expected next year. The changes will apply to all businesses with DB schemes.

At the heart of the regulator’s proposals is a new “twin-track” approach for demonstrating compliance with funding requirements. It involves a fast track route which would allow schemes to adopt set rules and methodologies set out by the regulator, and a bespoke route which would allow for more flexibility. But the latter requires trustees to explain and evidence why their approa