On the go: There are still doubts among trustees about their defined benefit schemes’ long-term strategy, as almost a quarter of these professionals (23.9 per cent) are unsure of their endgame strategy, a survey has revealed.
Barnett Waddingham’s poll, which questioned 552 individuals — mainly trustees — in its annual DB Pensions Conference, also showed that 24.6 per cent of respondents are looking at buyout, and 26.8 per cent are aiming for self-sufficiency.
At the current time, superfunds appeared to be the least favourable endgame strategy, with only 1.4 per cent looking at this option, the consultancy stated.
The research also showed that the majority of respondents — 66 per cent — believe they will reach their endgame goal in more than five years. Encouragingly, only 15.6 per cent were still unsure how long it would be, Barnett Waddingham noted.
When questioned on the two biggest worries for most schemes in a world beyond Covid-19, 36 per cent of respondents pointed to the burden of legislation or governance, while 30.9 per cent chose funding and investment risk.
The third most apparent worry was covenant in the long term for 23.5 per cent of trustees. However, covenant in the short term had a vastly different result, with only 5.1 per cent of respondents stating it as a worry.
According to the consultancy, diversity and inclusion has quickly risen up the agenda for trustee boards.
More than 70 per cent of trustees are already or would consider reviewing recruitment screening and search processes to increase diversity at board level, and 60 per cent would look to review language, style and methodology used in recruitment. However, only 2.4 per cent of respondents would introduce recruitment quotas.
Paul Houghton, partner and head of actuarial consulting at Barnett Waddingham, noted that “it is no surprise that the global pandemic has raised large uncertainties across the market, but despite this dramatic backdrop schemes see the burden of ever-increasing regulation as their biggest concern”.
He said: “It does beg the question as to whether this concern is driving trustees to distraction as many trustees are still unsure on their endgame strategy, still investigating their longevity reach, and don’t know how to mitigate the risk of distress.
“Prior preparation and planning is a priority for schemes as they set and navigate their way along their long-term strategies, whether that is targeting a future buyout transaction or carrying on in a self-sufficient environment.
“Without thorough understanding or a well thought-out strategy, schemes could fall short of their desired outcome.”
