Commenting on the Pensions Regulator’s (TPR’s) consultation on the statement of strategy for the DB funding code of practice, Laura McLaren, Head of DB Actuarial Consulting, Hymans Robertson, said:

“At last we have an idea of how TPR sees the draft regulations and code translating into a statement of strategy. The proposed template sets clear expectations for the information a scheme must provide, and what will be compliant.

“However, the extra disclosures looks like a significant addition to valuations. The challenge will be to streamline compliance so it’s as easy as possible.

“The newly inserted clause in the latest amended funding regulations offered some hope TPR would use more discretion in how much information schemes need to provide. But it hasn’t cut requirements in many places. A scheme’s route to compliance will have the biggest effect on how much detail it provides. The example ‘Bespoke’ statement runs to over 20 pages, which underscores the appeal that Fast Track could have.

“All schemes face a lot of work to set out strategy in the format required. This is the first time trustees are required to include covenant information with a valuation. They’ll also need to say how the scheme is to provide benefits in the long term (buy-out, run-off or alternatives), and summarise the approach to de-risking between now and the end of the journey plan.

“It’s not clear how much value the extra disclosure requirements add in a funding landscape that’s changed since the process for these changes began. Only a small, and shrinking, number of schemes are poorly funded. Amidst the Mansion House agenda, increasingly focus is on endgame and surplus management rather than scheme funding.

“Schemes with the earliest in-scope valuations (later this year) will have their work cut out. They need TPR to quickly publish the final funding code, Fast Track parameters and other guidance."