Actuarial equivalence requirement meaning

In this issue: Collective defined contribution (CDC) schemes Transfers Investment and funding Pension benefits The Pensions Regulator Dates for your diary Trackers Collective defined contribution (CDC) schemes Regulations laid before Parliament to extend CDC schemes to unconnected multiple employers The Department for Work and Pensions (DWP) has issued its reply to the consultation on the Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025. Concurrently, the draft regulations—expanding the CDC framework to ‘unconnected multiple employer’ arrangements, i.e. those not set up by a single employer or a group of connected employers—have been placed before Parliament. Subject to parliamentary approval, they are expected to take effect on 31 July 2026. The government reports widespread backing for the draft rules and has adjusted them to reflect stakeholder feedback, including dropping the ongoing requirement for scheme proprietors to sign off viability reports and revising provisions on actuarial equivalence testing. The...

THIS PRACTICE NOTE APPLIES IN RELATION TO OCCUPATIONAL PENSION SCHEMES The framework set out in sections 67–67I of the Pensions Act 1995 (PA 1995), often called the ‘subsisting rights provisions’ or simply the ‘section 67 regime’, places statutory limits on what changes can be made to occupational pension schemes. Broadly, section 67 is intended to stop adverse changes to members’ accrued (past service) benefits unless members agree. From 6 April 2006 (A‑day), section 262 of the Pensions Act 2004 revised the wording of the original section 67 (the ‘old s 67’). Following A‑day, the regime applies to ‘regulated modifications’ (see below), whereas the old s 67 covered any change that ‘would or might affect any entitlement, accrued right […] of any member acquired before’ the modification took effect. The old s 67 regime governed amendments made between 6 April 1997 and 5 April 2006. Prior to 6 April 1997, no section 67 regime existed and any protection against adverse alterations to scheme benefits (if any) derived solely from the...

What is certification and when is it required? Certification is the process used to decide whether a pension scheme meets the test scheme standard for auto-enrolment purposes. For defined benefit schemes (or the defined benefit part of hybrid schemes), an employer may take one of the following approaches: confirm that the scheme (or the defined benefit element of a hybrid scheme) meets the test scheme standard for its enrolment duties; or pass responsibility for certifying the scheme to the actuary in particular circumstances There are also specific situations in which the actuary is required to certify the scheme. For more detail on the test scheme standard for defined benefit schemes, see ‘Defined benefit occupational pension schemes’ in Practice Note: Auto-enrolment—what types of scheme may be used? Note that, for auto-enrolment only, hybrid schemes are those that are neither wholly money purchase nor wholly defined benefit. They usually include elements of both, and, depending on the scheme design, they may have to...