The Pensions Regulator (TPR) has published its Annual Funding Statement (AFS) for defined benefit (DB) schemes, the first issued under the new DB funding code, and signalled that improved funding levels mean most schemes should move their focus from deficit recovery to endgame planning. The AFS is aimed at trustees and employers completing their first valuation under the new DB funding regime. TPR reported that 54% of schemes are in surplus on a buyout basis, rising to 76% on a low dependency basis and 85% on a technical provision basis (figures as at 31 December 2024). The statement is particularly relevant for schemes with valuation dates between 22 September 2024 and 21 September 2025 (Tranche 24/25) and clarifies expectations around employer covenant and trustees’ assessment of supportable risk, while highlighting potential trade and geopolitical uncertainty as a risk to investment strategy and covenant. It also flags that trustees should be prepared for potential employer requests to release scheme surplus, adhere to current legislation and scheme rules, and notes that details are awaited on the Government’s planned legislation in the upcoming Pension Schemes Bill. TPR expects around 80% of schemes to be able to meet the Fast Track approach, which it says should lead to less regulatory engagement and simpler reporting, while confirming trustees can instead choose the Bespoke option. In coming weeks, TPR will launch a “Submit a scheme valuation” digital service (including a statement of strategy spreadsheet), and valuations with effective dates on or after 22 September 2024 must be collated and submitted using these tools; further guidance is also expected on endgame options.
The Pensions Regulator 2025-04-29
United Kingdom's The Pensions Regulator publishes first Annual Funding Statement under new DB funding code and expects a shift to endgame planning
The Pensions Regulator (TPR) released its Annual Funding Statement for defined benefit schemes, noting improved funding levels and a shift from deficit recovery to endgame planning. TPR reports 54% of schemes are in surplus on a buyout basis, expecting 80% to meet the Fast Track approach, reducing regulatory engagement. The statement also covers employer covenant assessments, potential surplus release requests, and upcoming digital tools for scheme valuation submissions.