Eleanor Daplyn discusses progress towards long-term objectives for DB schemes

Concerns over long-term objectives, managing funding constraints and keeping up with change rank at the top of concerns held at defined benefit schemes, followed by the task of balancing stakeholder interests, new research has found.

There are about 5,886 DB schemes in the UK. Of the 5,794 in the Pension Protection Fund’s universe, nearly 70 per cent were in deficit as at October this year.

Schemes also identified balancing the interests of stakeholders, and the threat of uncertainty, as key challenges to the DB sector, in the report compiled by Aon

Bring different stakeholders together

The paper, based on responses from trustees and pension managers at 190 schemes, underlines the importance of reconciling the interests of different stakeholders. Balancing stakeholder interests across areas such as funding negotiations, investment policy and member communication ranked fourth in the list of scheme concerns. Fifty-seven schemes placed this issue in their top three challenges.

Eleanor Daplyn, partner at law firm Sackers, said stakeholders need to be honest about funding support and covenant risks. “Before you do that you can’t really, as a trustee, assess whether your objectives are realistic and achievable,” she said.

Daplyn identified the impact of change and regulatory burden as a key source of concern for schemes. Seventy-eight schemes ranked ‘keeping up with change’ among their three biggest challenges. The issue came third in the report’s findings.

Trustees are worried about the Pensions Regulator’s expectations and “how to keep pace with those, and about understanding what’s expected of them all the time”, she said, including understanding the powers available to them.

“I think there remains uncertainty for schemes on the ground as to exactly how [these are] going to be implemented,” Daplyn added.

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