It complements the change in regulations and sets out a framework protecting savers while giving flexibility to the market, TPR said.

The new DB funding code sets out to trustees, sponsoring employers and advisers TPR’s guidance and expectations on how to comply with the funding and investment strategy requirements.

Once in force, it will replace the existing DB funding code, introduced in 2014.

TPR said the new DB funding code:

• encourages good long-term planning and risk management behaviours
• includes guidance on how trustees can set funding plans in line with the support their sponsors can provide and how maturing schemes can move to a point of low dependency on their sponsor
• gives guidance on setting recovery plans in line with what is reasonably affordable for their sponsor

Neil Bull, TPR’s executive director of market oversight, said: “Today marks the final step in realising a new DB funding code that reflects the changing DB landscape. The DB funding code strikes the right balance between security and flexibility for scheme specific funding and investment approaches in the interests of members and employers.

“It will enhance the system as well as provide a framework to protect millions of savers. It is a significant step, and we would like to thank all those who have contributed their views during our extensive consultation. Together we have developed a DB funding code that will support trustees in effectively planning and managing the long-term funding of their scheme today, and in the future.

“Trustees, their advisers and sponsoring employers should read the new DB funding code to appraise themselves of what TPR sees as good practice.” 

There are around 5,000 private sector DB schemes holding, as at 31 March 2023, £1.3trn worth of assets. But seven in ten are closed to future accrual and just 4% remain open to new members. The revised DB funding code has necessary flexibilities to be relevant and supportive of all DB schemes, including open ones.

The DB regulations, that align with the DB funding code, were laid in April this year and come into force on 22 September.

TPR said it recognised there will be a gap between when the requirements of the funding and investment strategy regulations start applying and the new DB funding code is in force. Schemes with valuation dates in this period will be able to use the new DB funding code as the base for their approach. TPR will be communicating with affected schemes and will take a reasonable regulatory approach to them.

David Hamilton, chief actuary at consultancy Broadstone, said: “It’s a great relief that we finally have sight of the final version of the funding code – some thought this day would never come. Trustees and their advisers, particularly those with 30 September or 31 December valuation dates, can now start to plan with greater certainty for the additional work that is needed.”