Update on 25 November 2016: SS5/15 was updated to reflect changes consulted on in CP20/16 ‘Solvency II: consolidation of Directors’ letters’. For an overview of updates made to SS5/15, please see Appendix 1 of SS5/15.
This supervisory statement sets out the Prudential Regulation Authority’s (PRA’s) expectations of firms in relation to defined benefit pension schemes and provides further clarity to firms which are the sponsor of a defined benefit pension scheme, or that are part of a group that contains a company which sponsors a defined benefit pension scheme. It is of interest to all UK Solvency II firms and to the Society of Lloyd’s, and should be read alongside all relevant European legislation and relevant parts of the PRA Rulebook.
The statement:
- explains what the PRA expects of firms that are not the legal sponsor of a defined benefit pension scheme but are part of a group that contains a company that sponsors a defined benefit pension scheme; and
- highlights areas to which firms should pay particular attention when considering the risks posed by a defined benefit pension scheme for the purpose of determining the solvency capital requirement (SCR). This includes risks arising both from pension schemes sponsored by the firm itself and those sponsored by another group company. This is relevant to the calculation of both the solo and group SCR.
Supervisory Statement 5/15 - November 2016