Industry experts have raised concerns over the extra work that The Pensions Regulator’s (TPR) statement of strategy proposals will require, questioning how useful this information will prove for the regulator, trustees, or members.

TPR is currently consulting on its plans to help trustees of defined benefit (DB) pension schemes meet new requirements for submitting a statement of strategy, as required under the upcoming DB funding regime, which is set to come into force from 22 September.

However, Hymans Robertson head of DB actuarial consulting, Laura McLaren, said that while the firm was glad to see TPR sharing detailed guidance, “we’re concerned that completing the template as proposed will create a lot of extra work”, estimating that a typical scheme could add 20 per cent to its valuation costs as a result.

She continued: “TPR can make completing the template easier, with pre-populated sections or automation where practical. But our main concern is around the amount of detail TPR is requesting.

"This would be onerous for schemes and disproportionate to what TPR needs to regulate them, especially in an environment with many well-funded DB schemes targeting buyout.

“As a submission for the regulator’s eyes only, the statement of strategy has little value for the schemes themselves beyond compliance. It would be helpful to know what TPR, as a ‘proportionate’ regulator, is going to do with all the information that schemes will submit."

This sentiment was echoed by Sackers partner, Eleanor Daplyn, who noted that whilst some concessions are made for smaller schemes, for most DB schemes, the statement looks set to require “extensive” actuarial, investment and covenant input.

“With schemes having to delve deeper into the detail, there is a real risk of increasing the burden on already stretched schemes,” she stated.

“Given the volume of DB scheme information gathered through the existing valuation process and annual scheme return, it remains to be seen just how useful TPR will find this new level of granularity.”

Indeed, Association of Professional Pension Trustees (APPT) chair, Harus Rai, argued that the statement of strategy is “very lengthy with endless items of data”, warning that much of the data schemes will need to provide becomes “stale” very soon after it has been provided.

He stated: “Our members feel that the statement of strategy needs to be materially cut down as in our view only a minority of the data items it is proposed to collect is helpful and the rest do not add value or clarity.

“For example, it is not clear to us what the benefit is to anyone of generating and providing estimated cashflows for the next 100 years.

“Instead, it would be useful if the statement of strategy was fulfilled by tweaking and supplementing data collected via the annual Scheme Return. Certainly, there should not be duplication in the data collected if the statement of strategy is a separate document.”

McLaren, meanwhile, said that the requirements for fast track in particular could be scaled back, arguing that "asking for so much information misses the point of what’s meant to be a regulatory ‘filter’".

"A better approach could be that, once TPR has screened schemes it wishes to investigate further, it can ask for more information where relevant," she stated.

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