UK pension schemes are expecting the Defined Benefit (DB) Funding Code, currently in consultation, to affect the way they are run in the future, a recent poll by Aon has found.

At a recent Aon webinar on the funding code consultation, almost 250 attendees were asked how material they thought the new funding regime would be to the way their schemes are run, with 42% of respondents indicating that they thought it would have either a moderate or a significant impact.

A further 48% thought it would have some impact, while only 10% thought it would have little or no impact.

Matthew Arends, partner and head of UK retirement policy at Aon, said: “It’s clear that the consultation on the DB Funding Code is concentrating minds at UK pension schemes with few believing that its effects will be negligible. The essence of the new code is simple: to ensure all DB schemes – including open ones – have a low-risk target and a plan to reach it by the time the scheme matures.”

However, Aon’s last Global Pension Risk Survey in 2021 showed that – even then – 81% of schemes already had a low-risk target and that the average expected time to reach full funding on that measure was just 8.8 years.

“So does the new code add much that’s new and needed? It does provide a welcome degree of latitude in many areas but it also contains several prescriptive elements. These include the requirement to agree most aspects of the plan with the sponsor, a new maximum risk check, the requirement to de-risk the target by a hard deadline based on the scheme’s duration of liabilities, and a much greater focus on quantifying the employers’ prospects and available cash, which are key determinants of the covenant’s strength,” Arends said.

He added: “During a period when they have been navigating new forms of volatility, we have also seen a growing burden on trustees and schemes – but the new funding regime would require further documentation to describe and monitor de-risking plans. The question remains whether the impact will be to drive better DB risk management, or whether it will simply be unnecessary interference in the well-established plans that schemes generally now have.”

Phoenix Group joins Transition Pathway Initiative
Phoenix Group, the UK’s largest long-term savings and retirement business, has joined the Transition Pathway Initiative (TPI), committing to using the TPI tool and its findings on how prepared companies are for the transition to a low carbon economy, within its decision-making.

This addition brings the assets under management and advice of TPI’s investor supporters above $50trn. The TPI board comprises asset owners from Europe, the US and Australasia.

Phoenix’s membership of the board will bring considerable insight and further adds to the growing momentum behind TPI as well as the role of investors in the global climate transition, TPI said.

Adam Matthews, chair of TPI and chief responsible investment officer at the Church of England Pensions Board, said: “TPI data empowers investors to understand and drive the low-carbon transition, providing independent, open-access and scientifically rigorous data on the world’s largest high-emitting companies. As long-term stewards of capital, cognisant of the risks and opportunities presented by the low carbon transition, Phoenix Group is a natural addition to the TPI board.”

Sindhu Krishna, head of sustainable investments at Phoenix Group, said: “Decarbonisation objectives are central to our investment strategy in order to manage risks and opportunities arising from the transition to low carbon economy. In becoming a member and joining the board of the Transition Pathways Initiative, it will allow us to continue to pursue our science-based approach to decarbonising our portfolio whilst helping others across a number of sectors to do the same.”

Multiple pensions dashboards already a reality, says Moneyhub
In response to the open consultations on pensions dashboards launched by the Financial Conduct Authority (FCA) and the Pensions Dashboards Programme (PDP) last December, open data platform Moneyhub has shown its support for multiple pensions dashboards saying this is already a reality.

Multiple commercial pensions dashboards will enable consumers to encounter and utilise dashboards from trusted brands from banks to pension providers, whom Moneyhub has already built a relationship with.

Additionally, Moneyhub is already seeing a high interest from the industry, with many planning to whitelabel its own platform in order to seek authorisation from the FCA and then enter the market and support their customers.

The platform also supports the FCA’s findings that a simple ‘find and view’ service would not be going far enough for consumers. Moneyhub strongly supports the FCA’s proposal to allow authorised Pensions Dashboard Service (PDS) firms to also offer post-view services (PVSs). This will enable customers once they see all their pensions in one place to understand the possible next steps. This, for example, could be exploring consolidating the pensions or arranging a conversation with the government’s free PensionWise service.

Dan Scholey, chief commercial officer at Moneyhub, said: “The most recent proposals make clear that it is not the pensions dashboard, but dashboards in the plural. Most have been in the habit of thinking of a single pensions dashboard, but in the UK, it’s clear that there will be multiple dashboards available for customers to choose from.”

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