Company directors currently have a “prime opportunity” to make the most out of recent defined benefit (DB) pension funding improvements and regulatory reforms, LCP has said.

The firm argued that agility will be important in 2024 when it comes to company pensions, as recent developments such as the Chancellor’s Mansion House speech and Autumn Statement, all point to a more positive relationship between pension schemes and a sponsor’s finances. 

It also suggested that the mood music on sponsors accessing surplus is changing, with the cut on the tax rate that applied to a refund of surplus from 35 per cent to 25 per cent being a welcome factor for all sponsors. 

Given this, the firm encouraged company directors to consider the range of alternatives and how these could lead to better solutions for both their business but also members of the pension scheme.  

It also highlighted a number of specific priorities that company directors should have when it comes to their pensions in 2024, including whether contributions are still being made to the scheme, and whether the best outcome for the business is to get the pension scheme and associated risks off the balance sheet, given the increasing alternative options.

Alongside this, it emphasised the need to consider whether the combination of stable high funding levels and low level of risk makes running schemes on for longer more feasible.

LCP partner and head of corporate consulting, Gordon Watchorn, stated: “No matter the chosen route when it comes to your pension scheme, the key takeaway is to remain agile. If the last few years have taught us anything, it’s that things can change quickly, even in pensions.

"Staying well-informed and alive to market opportunities is essential to navigating these changes.  

“Looking ahead, 2024 will be a fascinating year, and pivotal period for many sponsors regarding their relationship with the pension scheme, one way or another. Personally, I am very much looking forward to making sure sponsors’ objectives are at the forefront of pension schemes’ strategic journeys.”

---