TPR statement of strategy plan ‘asking too much’

The proposed document could also prove expensive for schemes to complete, with Hymans Robertson estimating that gathering the amount of information required could add approximately 20% to the cost of a valuation for a “typical” scheme.

The Association of Professional Pension Trustees (APPT), meanwhile, said the extra requirements and costs could “diminish the sustainability” of defined benefit (DB) schemes, particularly those with less than £50m in assets.

The organisations were among those responding to TPR’s consultation on the statement of strategy document, which closes this week (16 April).

Laura McLaren, head of DB actuarial consulting at Hymans Robertson, said the amount of information requested was “onerous” and “disproportionate” to the needs of the regulator.

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

“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.”

McLaren urged TPR to make the documents easier for schemes to complete, using “pre-populated sections or automation where practical”.

‘Endless items of data’

The APPT was particularly concerned about the scale of the data requests involved in the statement of strategy.

APPT chair Harus Rai said: “The statement of strategy that will need to be completed for schemes is very lengthy with endless items of data, as outlined in the example document released as part of the consultation.

“Our members feel that the [document] 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.”

Rai said the regulator should seek to avoid duplication of data collection, instead making use of information already provided through scheme returns.

The APPT argued that much of the data within statements of strategy would become “stale” soon after submission, and questioned how useful such information would be.

The association also voiced concern that the role of employers had been overlooked in the consultation, meaning statements could also quickly lose their usefulness if trustees and employers decide upon a change of direction.

“Overall, many of our members are not sure what problem the statement of strategy is trying to solve,” the APPT said in a press release. “To impose onerous additional data requirements on those schemes that are now well-funded and largely de-risked seems to be disproportionate regulation that conflicts with government regulatory policy.”

Eleanor Daplyn, partner at Sackers, said the proposal would require “extensive actuarial, investment and covenant input”, adding that there was “a real risk of increasing the burden on already stretched schemes”.

She also called for trustees to be given the ability to tailor the information provided to reflect scheme-specific circumstances, in particular for open DB schemes.

The Society of Pension Professionals (SPP), in its response to the consultation, said some of the information requests would add “little or no value” to trustee boards’ decision-making processes.

The society also warned that the requirement to resubmit the statements when strategy changes are made “could prove burdensome and may deter small schemes from making strategy changes that would be in the best interests of their members”.

TPR’s current proposal for the statements provides four template options, depending on a scheme’s maturity and whether it is aiming for the regulator’s ‘fast track’ or ‘bespoke’ funding assessments.

Further reading

DWP paves the way for DB funding code from September (29 January 2024)

New proposals set DB schemes on path to low dependency (26 July 2022)