The Society of Pension Professionals (SPP) has submitted its feedback to The Pensions Regulator (TPR) regarding its Statement of Strategy consultation saying that while some of the information requested by TPR is manageable, there are certain areas where the requirements are deemed challenging and costly for pension schemes.
A ‘statement of strategy’ and actuarial valuations are required to be submitted annually by defined benefit (DB) trustees, under the TPR proposal. The scheme’s long-term funding and investment strategy, as well as its method for handling such risks, should be outlined in this statement.
TPR intends to put these regulations into effect on September 22 of this year. The regulator has produced templates for these plans to help schemes adjust to these changes and to lessen the administrative burden on trustees.
TPR issued a Statement of Strategy consultation requesting information from pension schemes which will end Tuesday, April 16, in order to get input on both the templates and its proposals.
SPP says: “We believe that TPR is requesting some data that adds minimal value to Trustees’ decision-making processes, particularly for well-funded schemes with low dependency asset allocation. It’s hard to see how providing such data is proportionate or beneficial for TPR, thus imposing unnecessary burdens on schemes.”
The SPP suggests that TPR modify the information requirements to better fit each scheme’s specific needs. For example, it recommends lowering the requirements for well-funded programmes and lowering the amount of information needed from schemes that choose the “Bespoke” path purely out of financial need. Concerns have also been raised by the SPP on how the measures would affect small initiatives, particularly those that must use the Bespoke route due to its more difficult standards.
SPP says: “…the requirement to resubmit the Statement of Strategy between valuations if there has been a material change in circumstances e.g. a change in investment strategy… could prove burdensome and may deter small schemes from making strategy changes that would be in the best interests of their members.”
SPP defined benefit committee chair Chris Ramsey says: “Whilst, for most schemes, the information being requested is reasonable and proportionate, we strongly feel that for some what’s being asked for adds little or no real value either to trustees or the regulator itself – stripping that out would clearly benefit all parties. We also have significant concerns about the impact of additional costs on smaller, less well funded, schemes in particular.”
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