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TPR: 5% of DB schemes are at funding risk

TPR's annual funding statement says some schemes are at risk from employers struggling to fund them.

TPR: 5% of DB schemes are at funding risk

The Pensions Regulator (TPR) has said one in twenty defined benefit (DB) schemes are struggling to be funded by their employers and are ‘stressed schemes’.

In its annual funding report released today, TPR said 5% of schemes are in a weak position with regards to funding.

‘Our analysis indicates that there are approximately 5% of schemes in this valuation cycle where the employer is tending to weak, or weak and where it appears they are at risk of becoming unable to, or are already  unlikely to be able to adequately support the scheme,’ TPR said.

TPR said these schemes will not necessarily go insolvent over the next 12 months.

It said around 85-90% of schemes have employers which will be able to manage their deficits ‘and currently have no long-term sustainability issues’.

Earlier today prime minister Theresa May said the government will take action over pension schemes where unsustainable dividends are putting pensions at risk.

In its report, TPR echoed this and said it will consider investigations where dividend payments are made at the expense of contributions to pension schemes.

The regulator of occupational schemes also found that 10% of DB schemes completed their valuations later than TPR’s deadline.

‘As part of our drive to raise governance standards we are taking a tougher approach where schemes fail to submit their valuations on time,’ the annual report said.

'Trustees should plan to avoid unnecessary delays. We are more likely to take enforcement action in relation to the breach of law in this area, when delays could have been predicted, or where trustees do not engage with us regarding the breach.’ 

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