Recommendation 4

Open DB schemes help meet two important objectives: providing adequate incomes in retirement and investing in UK productive finance as they have greater capacity for this than closed schemes. Those responsible for running DB schemes have long expressed concerns that the Funding Code would force them to de-risk unnecessarily, increasing the costs to employers and resulting in their premature closure. While we welcome the additional flexibility in the revised Funding Regulations, it is essential Defined benefit pension schemes 55 that DWP and TPR work with open schemes to address the remaining concerns— particularly around the employer covenant horizon—and report back to us on how they have done so before the new Funding Code is laid before Parliament.