Prudential Regulation Authority Rulebook

1.1

This supervisory statement (SS)^[1] is of interest to all UK firms that fall within the scope of the Solvency II Directive (‘the Directive’),^[2] and to Lloyd’s. It 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 that 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. In particular, this SS:

• 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.

1.2

Deleted.

1.2A

This statement should be read in conjunction with the PRA’s rules in the Solvency II Sector of the PRA Rulebook, in particular the Conditions Governing Business and the Solvency Capital Requirement Parts, and the PRA’s insurance approach document.^[3] 

1.3

This SS expands on the PRA’s general approach as set out in its insurance approach document. By clearly and consistently explaining its expectations of firms in relation to the particular areas addressed, the PRA seeks to advance its statutory objectives of ensuring the safety and soundness of the firms it regulates, and contributing to securing an appropriate degree of protection for policyholders.

1.4

Deleted.