The Pensions Regulator (TPR) will launch the first of a two-part consultation on a revised defined benefit (DB) funding code in March, it has told PP.
The watchdog will propose that employers and their schemes can opt for either a "fast track" or "bespoke" approach to how they deal with TPR. While the former will face lower scrutiny, it will be a more prescriptive route.
The consultation has faced significant delays, most latterly due to the general election. Plans to amend the funding code were first mooted in the government's DB white paper, published nearly two years ago, and the regulator had initially hoped to publish the consultation last summer.
Writing for Professional Pensions, TPR chief executive Charles Counsell said the updated regime would also provide "early warning of potential problems".
He added: "The flexibilities in our regime will continue to help trustees and employers balance the need to pay promised benefits against the employer's ability to run and grow their business."
Counsell also confirmed that TPR would deliver its final decision on the future of trusteeship next month. Among other questions, the watchdog has asked whether every trustee board should contain a professional trustee, how to improve diversity on boards, and whether there should be minimum standards of knowledge and understanding.
He said the regulator wanted to "explore ways to make the trustee model more effective".
"The model isn't broken, but it does need improving," he said, later adding: "I'm pleased that feedback to the consultation shows there is clear support for our vision of all savers being in schemes that have excellent standards of governance that deliver good value."
A fast track approach means less scrutiny
Under the fast track approach, TPR will expect schemes to target low dependency on their sponsoring employer by the time they reach maturity. Schemes will also be tested on whether they are "taking excessive amounts of investment risk" but will otherwise face less regulatory scrutiny.
On the other hand, the bespoke route will give schemes flexibility to set the lengths of their recovery plan and vary the amount of investment risk. The regulator has previously said it will "expect them to justify that", with proposals looked at "in much more detail".
TPR expects the fast track route to be especially attractive for smaller schemes that have limited resources.
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