Defined benefit (DB) pension scheme trustees have been urged to start developing their long-term plans "sooner rather than later", amid concern that many DB triennial valuations will be taking place against a “background of change”.

In its latest 2024 valuation series update, Hymans Robertson noted that improved funding levels, increased affordability for buyout and a forthcoming general election are likely to impact pension scheme funding and employer covenant, as DB schemes undertake one of their most important risk management activities.

Given this, it identified a number of key areas which should be reviewed as part of the valuation, including the "huge range" of changes in the market, such as The Pensions Regulator's (TPR) forthcoming DB Funding Code.

However, it argued that for schemes with a 2024 valuation, this could also provide an "opportunity" to reassess if long-term funding and investment plans are appropriate.

Hymans Robertson partner and head of DB scheme actuary services, Laura McLaren, said: “The speed of change for DB schemes has been unprecedented in recent years. This has created a new landscape which schemes must fully review ahead of their 2024 valuation.

“The triennial valuation is a key opportunity for schemes to stop, take stock and look at their longer-term ambitions against a backdrop of political and regulatory change.

“For schemes that have reached the point of being able to insure benefits, they face a very different set of opportunities and challenges."

In particular, McLaren said that the government’s ‘Mansion House reforms’ have helped to energise the discussion about alternatives to buy-in and buyout, and taking the time to review long-term objectives will help ensure funding and investment decisions are aligned.

"A choice between running on the scheme or buying out with an insurer depends on a scheme’s circumstances, and the trustee’s and sponsor’s objectives and beliefs," she continued, arguing that endgame planning will be most effective when the trustees and sponsors are pulling in the same direction.

She also argued that the recent uncertainty shouldn't deter schemes from making progress, stating: "As schemes develop their long-term plans an element of political uncertainty looms in the background with the forthcoming general election.

"We are yet to understand the impact this will have on timings of existing regulatory plans, and any changes a new government will make.

“However, a delay to the release of the new funding code already looks inevitable and underscores the uncertainty schemes will need to navigate this year. Nevertheless, this shouldn’t stop schemes from making progress. We would urge schemes to start developing their plans sooner rather than later.”

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