Two Thirds Optimistic About TPR DB Funding
More than two-thirds of pension professionals expect the Pension Regulator’s new defined benefit funding code to have a positive impact on their schemes, according to a new survey. The research found 67 per cent of respondents were optimistic about the upcoming regulations, while just 9 per cent anticipated a negative effect on their schemes.
Survey reveals appetite for bespoke funding approaches
When asked about their next valuation strategy, 53 per cent of respondents said they planned to adopt a bespoke approach rather than the fast track option. Only 19 per cent indicated they would use fast track, with the remaining 28 per cent still undecided. The data came from 300 conference attendees in Manchester and London.
Aon partner Paul McGlone said the views reflected expectations that the code would provide greater clarity and guidance while maintaining flexibility. “So we need to see whether it delivers that,” he noted.
Regulator faces questions on enforcement
The Pension Regulator plans to begin consultation on the revised funding code in March. The goal is to introduce clearer funding standards, encourage schemes to focus on long-term planning and manage risks appropriately. McGlone pointed out that most respondents had been trustees or professionals supporting trustees, whose views are more likely to align with those of the regulator.
Related: Industry warns DB surplus rules are overly burdensome
“We would expect companies and sponsors to be more cautious,” he added.
The survey also highlighted concerns about smaller schemes and their access to guidance. McGlone noted that smaller schemes, expected to be more likely to use Fast Track, tend to be under-represented at industry events. He explained that Fast Track must be simple to use but “not so easy that it fails to provide security.”
McGlone said the actual consultation is expected soon and that clear definitions of the two approaches will be the key thing to watch. Several questions will follow from this. How realistic will it be for large numbers of schemes to achieve Fast Track? And how close to Fast Track will bespoke have to be?
