John Tranter, Chair of CFG’s Pension Maze comments on the release of the Pension Regulator’s DB code of practice.

12th June 2014

Overall, we are pleased to see the focus on strong communication in the new code between pension scheme trustees and sponsoring employers. However, the DB code of practice contains a new 'sustainable' growth objective which has given us cause for concern. We're worried that the objective, when applied to charities, would result in misleading focus on financial growth. Our concerns were also reflected in the House of Lord’s debate on the new objective.

We recognise that this new statutory objective for the Pensions Regulator needs to be applied consistently across all sectors, and we are pleased that some different applications of ‘sustainable growth’ are acknowledged in principle in the new code. However we believe that this does not go far enough in assisting trustees and advisors of both pension schemes and charities in how to interpret and implement the new guidance.  Without clear and explicit guidance, pension trustees may apply standards for charity covenant assessment inconsistently across the sector.

We previously recommended that the code should include explicit reference to what ‘growth’ can look like for charitable employers. It is disappointing that the Pensions Regulator has decided not to amend, or provide sufficient caveats around the wording of the new objective to reflect these broader set of considerations for charities.

John Tranter said:

"Covenant assessment for charities needs to reflect the differences in their financial characteristics from commercial entities. These factors should drive a different set of questions from those which would be used for commercial entities, when assessing whether a charity will fulfil their DB funding commitments".

CFG will support the Pensions Regulator in exploring what additional guidance they can provide. Guidance is an essential part of supporting pension and charity trustees.

CFG’s forthcoming best practice publication ‘Navigating the Pension Maze’ highlights the importance of managing these relationships and developing joint strategies to ensure both charities and their pension schemes achieve their objectives.


Notes for editor:

1. Charity Finance Group’s vision is to inspire the development of a financially confident, dynamic and trustworthy charity sector. CFG works with finance managers to enable them to give the essential leadership on finance strategy and management that their charities need; promoting best practice in charity finance, driving up standards, campaigning for a better operating environment and ensuring every pound given to charity works harder. CFG has more than 2,200 members, and collectively our members are responsible for the management of over £19bn in charitable funds.

2. Navigating the Pension Maze will be launched on 10th July. For more details about the event and the publication please see here.

3. CFG flagged concerns with the Pensions Regulator about implementing its new objective and the impact that will have on assessment of defined benefit funding positions. Here you will find more explanation of what 'growth' looks like for charitable employers.

5. John Tranter, is an associate CFG member, Director at Numon Consulting, former Finance Director at Mencap and the Chair of CFG’s 2014 publication ‘Navigating the Pension Maze’.

6. For more information, please contact CFG’s policy team on or on 020 7871 5476.

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