Pensions - Articles - Poll finds Funding Code is aimimg schemes at future planning

 The webinar attracted 420 attendees who were polled on which area of the Funding Code was likely to require most of their focus. A combined 49 percent said that long-term objectives and forming a journey plan topped their agenda, while covenant monitoring (17 percent), low dependency investment (16 percent) and low dependency funding basis (15 percent) accounted for most of the remainder of responses.

 Matthew Arends, partner and head of UK retirement policy at Aon, said: “Schemes will be evaluating the detail of the Code against their existing plans and procedures, with the principles of this and the regulations being familiar to most well-run schemes. However, the detailed requirements of the Code don’t necessarily square with how any individual scheme is approaching these principles at the moment.

 “It’s likely that when going through this process, areas of incompatibility will arise, and the polling results show that the areas that will need working on can arise across the whole range of scheme activity.”

 Emma Moore, associate partner at Aon, said: “One example is the requirement for the majority of schemes to introduce an expense reserve in the future, when often that isn’t now the case. That’s even in situations where, as a practical matter, the employer is paying expenses. This could lead to perverse consequences with employers becoming increasingly unwilling to continue paying scheme expenses due to the risk of paying for them twice. Given that expense reserves can range from 0.5 percent of liabilities to as much as over 20 percent, I can see this becoming quite a significant matter for negotiation between all parties and could lead to greater reliance on the scheme to cover expenses instead.”