Pensions - Articles - Comments on TPRs Statement of Strategy Consultation response


Hymans Robertson, XPS Pensions Group and LCP comment on TPRs Statement of Strategy Consultation response

 Laura McLaren, Head of DB Scheme Actuary Services Hymans Robertson, said: “With the regulations and funding code going live for valuations, at last we know how TPR intends the statement of strategy to operate.

 “Amidst widespread concerns the earlier proposals were disproportionate, inflexible and would be unduly onerous for schemes, we’re glad to see that TPR has taken that feedback on board. TPR has stuck with a suite of templates, but these are more streamlined with the detail it is proposing to collect scaled back. In an environment where an increasing number of DB schemes are well-funded and relatively low risk, the concessions directed at those in surplus and taking Fast Track are particularly welcome.

 “Overall, the changes have moved the dial in the right direction. However, completing the (albeit improved) templates will still incur extra work as schemes need to set out plans and evidence in the format required. Example guides run to around 17 pages for Fast Track and 28 pages for Bespoke. Trustees and sponsors will need to factor this into upcoming valuation plans but at least now they have the certainty to meaningfully start to prepare.”

 Pauline McConville, Senior Consultant at XPS Group: XPS Group welcomes the fundamental changes outlined in this response, specifically the simplified statement of strategy templates (with four examples provided, depending upon the specific scheme circumstances) and the reduced information requirements for many schemes (in particular for smaller schemes and those that can prove that they are taking on lower risk). The response goes into detail on where the actuarial, investment and covenant information is expected to be lesser, and while this is only an interim response, XPS Group is supportive of the TPR providing this level of clarity now, so that those schemes can start to plan with more of an informed idea on what the final submission will expect. XPS also welcomes the removal of any ambiguity in the definition of a smaller scheme.

  
  Richard Soldan, LCP Partner and Head of LCP’s DB funding group, commented: “It’s great to see the latest thinking from TPR and helpful that they have listened to the general mood of the industry, reducing the level of information many schemes will need to provide to a more proportionate level. I’m pleased they have also recognised the position of open schemes more explicitly.

 “Trustees will need to consider at an early stage the full list of data that they will need to submit, particularly if they expect to take a “Bespoke” approach, to make sure they cover all the requirements efficiently as they go through the valuation process.

 “And while we have the detail about the data schemes will need to submit, we won’t know exactly how it will need to be provided until spring next year when TPR’s new digital system is up and running. It’s really important that TPR ensures the new system is easy to use, to ease the burden on schemes.”

 Helen Abbott, LCP Partner and covenant adviser, added: “It’s good that TPR has introduced a category for low-risk schemes which will now only have to submit limited covenant information. It’s also helpful that some of the numerical covenant values can be calculated and expressed more pragmatically within the statement. But trustees will still need to consider the new covenant metrics introduced by the new funding regime in line with the legal requirements in the regulations and the principles in the code, which will often require more analysis than trustees have carried out in the past.”

  Trustees must use TPRs new DB Funding Code from now on
  

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