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Pensions bulletin

Pensions Bulletin 2016/15

Pensions & benefits

Covenant advisers publish industry guidance

The Employer Covenant Working Group, a forum established for employer covenant advisers to discuss best practice, raise standards and promote awareness, has announced its formal launch this week through publishing guidance on principles of covenant assessment for DB scheme valuations.

The guidance sets out the high level methodology to be applied when conducting such covenant assessments and then goes on to examine in some detail the considerations to be taken into account. It also describes the legal and regulatory framework within which covenant advisers operate and explains the linkage of covenant with actuarial liabilities, now subject to integrated risk management.


With the affordability of pension costs a high profile issue now, covenant assessment is a vital tool for trustees and support from a dedicated industry body of advisers is welcome and helpful.

Pensions Regulator consults on guides to accompany updated DC code

The Pensions Regulator is consulting on six “how to” guides to help trustees implement its revised DC code (see Pensions Bulletin 2015/50).

The guides have been designed to support the new shorter code and explain to trustees how they can demonstrate compliance with the law. They take in turn each of the six main chapters of the code – namely the trustee board, scheme management skills, administration, investment governance, value for members, and communicating and reporting.

Consultation closes on 11 May 2016 and the code and guides are expected to come into force in July.

Auto-enrolment – DWP updates hybrid rules for the end of contracting out

The DWP has published the Hybrid Schemes Quality Requirements Rules 2016 which set out how the quality requirement for auto-enrolment purposes needs to be satisfied in relation to an occupational pension scheme that is neither defined benefit nor money purchase. Five types of hybrid scheme are covered.


These rules replace those issued in 2015 and the only change is the removal of references to contracting out and a sixth type of hybrid scheme – the contracted-out hybrid scheme – which would likely have covered most schemes that were contracted out on a salary-related basis prior to 6 April 2016. From this date such schemes have been required to satisfy one of the five remaining types, with most likely to meet the general rule type.

This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.