Almost half of UK finance leaders claim they could devote more time to core business priorities if they could offload responsibility for governance and funding of their pension scheme.
This is according to research from Standard Life, which quizzed 100 senior finance decision-makers at companies with a defined benefit (DB) pension scheme. The research found that pension schemes continue to demand significant management attention despite improved funding levels across much of the market.
The research sought to understand the time commitment and focus from finance functions and found that 74% of senior finance levels described the management time associated with their DB scheme as significant.
The time-intensive nature of managing a DB scheme was also evident when they were asked where the scheme sits in terms of their overall financial priorities, with 46% describing it as a regular agenda item. More than two in five (42%) said their DB scheme was a recurring board-level focus.
When asked what impact removing the scheme from their responsibility would have, 48% cited a greater ability to focus on core business activity, while 37% said it would lead to a simplification of operations and internal processes. More than a third (35%) said it would reduce demand on senior management time.
Claire Altman, managing director for pension risk transfer and individual retirement at Standard Life, said the findings reflected the importance of making decisions over endgame options.
“The change in funding levels means many sponsoring employers now have options and can consider whether they want to continue to shoulder the responsibility for the scheme and run on, or pass the responsibility,” Altman said.
“Both routes involve trade-offs, but one of the major benefits of the insurance route is a reduction in the time DB schemes take up on management agendas and a greater ability to focus on core business decisions.”
The findings come at a time when 67% of DB schemes are now in surplus on a technical provisions funding basis. This is up from 39% at the previous valuation cycle.
