Long-term funding targets for DB pension schemes

Richard Farr, MD at Lincoln Pensions, wrote an article addressing long-term funding targets for the sponsors of defined benefit pension schemes, for the publication Financial Director.

Long-term funding targets were announced by the Pensions Regulator in its 2019 Annual Funding Statement, released in March 2019.

Richard explains why long-term funding targets have arisen and what they are. Sponsors will be expected to directly bear their pension scheme risks, so they must make a concerted effort now to manage them.

Three key actions for sponsors are:

  1. Prepare to disclose the size of the ‘real’ pension risks to stakeholders to avoid surprising them in the future
  2. Engage with the trustees on investment decisions, and ensure the risks they are taking are ones the sponsor is able, and willing, to bear
  3. Explore the use of alternative security structures to reduce the risk of overfunding the scheme and inefficient use of the business’ capital.

Read the full article in Financial Director
See Richard Farr’s bio

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