“As of this coming weekend, triennial valuations with effective dates from now will need to be carried out under the new Funding Code regime.
“Many schemes find themselves in a different position to where they were when the Funding Code was just a thought, with many better funded and having less reliance on their sponsor. But in many cases the new environment now comes with different challenges, primarily choosing an endgame.
“Nevertheless, we hope that the increased attention the Code places on long-term planning, regardless of the valuation track a scheme chooses to take (Fast Track or Bespoke), focuses minds on managing risk over the entirety of the scheme’s journey. This should include proportionate covenant analysis as a crucial input into that risk profile too, as is reflected in the new legal requirement to consider covenant within the Regulations. It will help trustees to be clear on the distinction between “box-ticking” and “best practice”, particularly when commissioning external covenant advice.
“While we await the final key pieces of the regulatory jigsaw puzzle, including the final Statement of Strategy templates and associated data requirements, and the covenant guidance; both of which are vitally important in this new era of detailed documentation, here are some steps that Trustees can start thinking about and discuss with advisers:
1. Get up to speed on the key points of detail within the Funding Code, for example through training sessions
2. Understand your scheme’s situation in the context of the new requirements – in particular, what are the elements that may require new or additional consideration (for example, supplementary covenant analysis)
3. Be clear on documentation requirements – the new regulatory environment is now almost as much about documenting as it is about doing
4. Start making a detailed plan to be ready, working back from the first applicable valuation date.”
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