DB pension plan trustees and sponsors are concerned about increased costs and time demands from compliance activity, for the DB Funding Code’s implementation later this year was Hymans Robertson.
Over half of trustees and sponsors or 42 per cent expressed concern about the Code’s added governance problems and, consequently, associated costs during a recent webinar hosted by the top pensions and financial services firm.
Just 10 per cent of trustees and sponsors appear to believe that the draught Code will significantly alter their present plans, according to the webinar results, despite The Pensions Regulator (TPR) having flagged best practice on the anticipated changes for a number of years.
Nearly a quarter or 22 per cent think that even while changes to the Code might be simple, the added costs and compliance requirements might be more challenging. Over half or 52 per cent of trustees and sponsors plan to review and reassess their long-term strategy in light of the Code.
Hymans Robertson partner and head of scheme actuary services Laura McLaren says: “Our poll results are a welcome sense-check from sponsors and trustees. They show that although the DB Funding Code won’t be in place before October at the earliest, most have already been looking ahead to the coming changes.
“However, all schemes are still going to have to do more governance-wise, to map out a future strategy in the format required and report on progress. With many plans in good shape, it is perhaps not surprising to see a focus on this additional paperwork and the associated compliance costs.
“Until both the Code and the regulations are finalised, some caution remains in regard to the overall cost impact. The rigidity of the DWP regulations, in particular, is a gnawing concern despite there being a lot more flexibility in Code itself. This tension needs to be resolved with amendments to the regulations to ensure TPR’s framework will work as intended.
“Ultimately, it would be disappointing if the changes distract focus or disrupt well-planned scheme-specific approaches due to insufficient flexibility or the compliance burden becoming disproportionate.”