The results of polling at a recent webinar, held by the leading pensions and financial services consultancy, found that nearly half of trustees and sponsors (42%) are concerned about the additional governance challenges, and in turn associated costs, that the Code will bring.
With The Pensions Regulator (TPR) having flagged best practice about the expected changes for a number of years, the webinar results suggest that only 10% of trustees and sponsors think that the draft Code will lead to a significant change of their current plans.
Around a quarter (22%) believe that while changes from the Code may be straightforward, the associated costs and additional compliance may be more complicated. Just over half (52%) of trustees and sponsors will use the Code as an opportunity to review, and sense check, their long-term strategy. This underscores the delicate balance between TPR bringing a minority into line and the new requirements adding an additional layer of compliance for schemes who are already doing the right thing.
Commenting on the impact of the DB Funding Code, Laura McLaren, Partner and Head of Scheme Actuary Services, 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 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 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.”
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