Funding DB pension schemes in the charity sector

Most defined benefit (DB) pension schemes are closed to new benefits, and are steadily maturing towards their ‘endgame’.

Many charities have long histories and can expect to be around for the long-term, but may also have restrictions on the cash they can pay to their pension scheme in the short-term (particularly in light of the current Covid-19 pandemic) so need to ensure that risk and volatility is appropriately managed.

Providing a bit of background, TPR’s consultation on the DB Funding Code is assessing:

  1. A clearer framework for what constitutes an appropriate funding plan, including what TPR sees as an appropriate long-term objective.

  2.  The concept of a ‘Fast Track’ route to demonstrating compliance, with scope for a more ‘Bespoke’ approach subject to greater regulatory scrutiny.

  3. Clearer guidelines on the effect of the financial strength of the sponsoring employer, and also on acceptable periods for any funding shortfall to be corrected.

With the consultation set to provide a steer towards TPR’s direction, now is the time for charities to review objectives and strategy, particularly when it comes to deciding if they should be taking the Fast Track.

This briefing note addresses these topics and challenges, including what tools we offer to help charities set short and long-term endgame objectives and mitigate risk.

Download our briefing note

Fast Track Indicator

If you want to check how your funding plan compares to the Fast Track regime, our free-to-use Fast Track Indicator tool will help.


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Watch our webinar

Barnett Waddingham recently hosted a roundtable in conjunction with Charity Times to discuss DB funding issues in the Charity Sector. A write-up of this roundtable is available in the digital Feb/March 2020 edition of Charity Times.

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