Actions for employers with 2019/20 funding valuations

At a glance


The Pensions Regulator (TPR) recently published its 2020 Funding Statement, which provides guidance for schemes undertaking funding valuations now


TPR is not allowing schemes to delay their effective valuation date due to COVID-19, but does suggest agreement of assumptions can be delayed until more clarity emerges


Scenario analysis is encouraged to help understand the different ways the economy may recover and impact on funding


TPR stresses the importance of employers and trustees working together to reach reasonable outcomes


Employers should expect to be asked by trustees about long term funding targets and potential action if the scheme is off-track


Getting back on track

Many schemes will be behind on their journey to a long term target due to COVID 19. Employers should consider all options available to get back on track, including extending the target date and using contingent support.


Potential scenarios to consider

Actions employers can take

  1. Prepare for upcoming valuations by clearly working out what you can afford. Consider options for contingent support and contributions linked to your business contingency plans.

  2. Review how the scheme would react to different economic and demographic recovery scenarios.

  3. Be prepared for more frequent and more detailed covenant monitoring by scheme trustees and set up ways to give them regular information efficiently.

  4. Check whether your scheme is on track to achieve its long term objective within the target timeframe, and what actions you might take if not.


Options for managing schemes’ journeys

Trustees may ask that some of the following options are considered:


Actions for schemes undertaking their valuation now

For further information, please get in touch with Vicky Mullins, Alex Miller or speak to your usual XPS Pensions contact.

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