Marvin OnumonuDefined benefit (DB) pension schemes have moved from focusing on deficits to setting long-term strategy, according to Hymans Robertson.
Under new rules, schemes must now document their endgame vision and show how funding and investments support it at their next valuation.
The firm said trustees and sponsors should use the time before the next valuation to agree on the long-term direction, making sure all parties are involved in the discussion.
Hymans Robertson found schemes will need clear plans for the future that comply with regulations and match their ambitions.
Laura McLaren (pictured), partner and head of DB scheme actuary services at Hymans Robertson, said: “We’re seeing a big shift in how schemes approach long-term planning.
“Amidst an expanding range of endgame options, the new funding code has raised the bar, encouraging trustees and employers to engage meaningfully on these issues.
“More schemes are exploring run-on strategies and surplus sharing. With potential surplus release likely to be linked to low dependency, schemes will want to avoid locking into unduly restrictive paths or defaulting to fast track compliance.”
McLaren added: “The ability to adopt flexible assumptions; including dynamic rates, better alignment with assets, and tailoring expense reserves, means schemes with clarity on their endgame can build plans that reflect their true ambitions.
“A clear endgame, whether buy-out, run-on or consolidation, sets direction and informs funding, investment and planning.
“This is about more than meeting regulatory requirements.”
She said: “It’s about unlocking long-term value and ensuring valuation decisions support, rather than constrain, long term strategy.
“Sponsors and trustees who engage early and plan with clarity will be best placed to navigate the new landscape and make the most of the options now available.”
