30 April 2020
Today the Pensions Regulator issued this year’s funding statement setting out its key messages for trustees and sponsors who are undertaking DB valuations at the current time.
The statement has been published somewhat later than intended, due to the Covid-19 outbreak and the accompanying dramatic changes in financial markets.
In this News Alert we summarise and comment on its contents. From this you will see that there is a greater focus on the covenant aspect of integrated risk management than before – perhaps inevitable given current economic conditions. The set of tables in which the Regulator sets out its expectations across covenant, investment and funding, which differ according to the characteristics of the scheme, are identical to those in last year’s statement. However, the surrounding guidance includes considerable detail on covenant checking and responding appropriately to current conditions, reminding trustees and sponsors that schemes still need to get a fair share of available cash (albeit recognising that less cash may now be available). There is also a warning that the Regulator may issue further funding guidance later in the year.