Nine out of 10 trustees and pension professionals do not think The Pensions Regulator’s defined benefit funding code of practice will be introduced on time.
A poll by the consultancy Broadstone reveals that 91% believe it will not be implemented in October, as planned, given the work still required – as well as the need to reflect on the implications of last year’s sharp change in underlying economic conditions.
A total of 71% did not think the DB funding regime needed reform anyway, with only 19% seeing it as necessary; 8% were unsure.
A consultation on the code, and its proposed twin-track regulatory approach, closed in March. The requirements due to come into force in October are seen throughout the finance sector as the biggest change in DB funding and investment strategies in 20 years; they cover all aspects of funding, including covenant, investment and actuarial valuations.
Broadstone head of policy David Brooks said the survey reveals major concerns over the reforms among the trustee and pensions community.
He added: “Many continue to be concerned about the high hurdle that the code imposes on schemes and sponsors for what will, in a lot of cases, appear to be very limited gain, and sponsors will no doubt find further contribution requests hard to stomach, given the general reports of much improved funding.
“In many ways, the responses are a back-handed compliment on the work the regulator has done over the past few years. They have discussed, in their annual statement, long-term targets, the integrated risk management model and focusing on situations of sponsor distress. This has directly resulted in good funding and investment practices being adopted by the well-advised schemes and left them now questioning the need to go further.”
