Industry experts have welcomed The Pensions Regulator’s (TPR) consultation on meeting requirements for submitting a statement of strategy, but some have raised concerns about the level of compliance burden it could put on trustees.

TPR’s consultation seeks views on how to support defined benefit (DB) scheme trustees meet new requirements for submitting a statement of strategy as part of new DB funding rules.

Broadstone head of market engagement, Simon Kew, said the firm was pleased that the regulator had taken feedback onboard from its original consultation on the DB Funding Code about making the compliance process for the code less onerous for trustees in relation to the statement of strategy.

“The regulatory landscape for trustees is incredibly active at the minute so any steps TPR can take to ease the burden of each new initiative should be welcomed,” he added.

“Ultimately, legislation and guidance should be designed in the best interests of savers and to improve member security, which can also include ongoing support from a sponsor, and so we await final guidance from TPR to see how this objective is achieved in this instance.”

Society of Pension Professionals (SPP) president, Steve Hitchiner, concurred, noting that the association was “particularly pleased” that TPR had acknowledged the need to deliver the benefits of the statement of strategy without unnecessarily increasing trustee burden and cost for schemes.

“The easements for smaller schemes are welcome, as is the provision of a standard template that schemes can populate. The focus on proportionality in the consultation is also positive,” he said.

However, Hitchiner stated that the SPP remained concerned that many schemes will need to provide lots of new information compared to current valuations, including in relation to covenant, which “could prove burdensome for some”.

Concerns around the level of trustee burden were also raised by Isio partner, Mike Smedley, who said that the proposed statement of strategy appears to include “significant duplication” with existing rules.

“TPR have gone to town on the data they want, which is going to add to trustees’ compliance burden, without any evidence it will improve outcomes,” Smedley continued.

“If TPR want granular data then a checklist, or an online return, would be much more effective, rather than forcing trustees to draft extensive and repetitive documents, which very few people will ever read.

“It’s ironic that with most schemes in great financial shape, the regulatory burden continues to rise – distracting trustees from their job of doing the right thing for members. Maybe we need a regulatory “reset” to decide what proportionate regulation looks like.”

LCP partner, Jon Forsyth, noted that much of the information to be submitted will be new to most schemes, with trustees and their advisers needing to get familiar with the figures in the coming months.

“Some may need to take professional covenant advice for the first time,” he said. “TPR's example of how they expect maximum affordable contributions to be evidenced is therefore also welcome.

“It's also worth noting that the first half of the statement of strategy covers the funding & investment strategy, which needs sponsor agreement, so sponsors should also take note and ensure they understand what is required."

While the regulator expressed its desire to be proportionate, Cardano managing director, Emily Goodridge, warned that there was a risk that an overly prescriptive approach would push trustees into “costly box-ticking” based on a central scenario rather than “really thinking about covenant risks and how best to manage these collaboratively with the sponsor”.

PwC UK pensions markets & services leader, Gareth Henty, concluded that, whether the final requirements may look like, providing TPR with full and accurate information will be a “complex process”.

“Comprehensive engagement will be needed between trustees and sponsors to effectively integrate the new employer covenant metrics with the cashflow projection and maturity assessment of the scheme, and thinking through how the journey plan, actuarial assumptions and investment strategy will evolve towards the long-term objective,” he stated.

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