Commenting on TPR’s 2024 annual funding statement published today, Laura McLaren, Head of DB Actuarial Consulting, Hymans Robertson, said:

“With DB funding holding strong and a new funding code coming later this year, it’s not a surprise to see this year’s statement significantly scaled back.

“Whereas past statements have centred on repairing deficits, fewer schemes remain in those regulatory crosshairs. Therefore, most of the statement is about encouraging trustees to develop endgame strategies. The content echoes the shift in schemes starting to think beyond being funded on a solvency basis – as we’ve also seen reflected in the recent ‘options for DB’ consultations.

“Schemes are positioned to make decisions that could materially affect member outcomes. So it’s good that TPR is highlighting the growing range of endgame and consolidation options, and directing trustees to robustly consider the full spectrum, including alternative arrangements where appropriate.

“We agree with TPR that the economics of running on are likely to be more attractive for larger schemes. We support the broader steer to explore a scheme’s own circumstances, objectives and beliefs.

“Risks, ongoing expenses and discretionary increases are all sensible factors to consider. It was surprising, however, to see very little emphasis on the importance of building consensus between the sponsoring employer and trustees, as this approach is likely to lead to the best outcomes.

“Given how much the DB landscape has changed, trustees and sponsors are going to need a lot of support to carefully weigh up a decision between run-on, buy-out or an alternative.”