2023 was a big year for pensions policy and the de-risking market
What does this mean for trustee agendas in 2024? Is it time for a rethink on strategy? What else should trustees be prioritising?
The Mansion House Calls for Evidence and the Autumn Statement signal winds of change in 2024. As we enter into the new year, trustees should consider if now is the time to ‘kick the tyres’ on their long-term strategy to ensure it remains fit for purpose under this new horizon and consistent with the longevity and strength of the sponsor’s covenant.
De-risking activity over 2023 has challenged notions of schemes being ‘too small’ for insurance (we saw a £600k scheme secured through a competitive process) and have dispelled the myth that illiquids are a barrier for larger schemes (with the British Steel Pension Scheme transacting with c£1bn of illiquid holdings).
In 2024, trustees of the smallest and largest schemes should be rethinking the potential role of insurance in their end game and making sure they have a realistic estimate of the cost to insure (noting this may often differ from the statutory solvency estimate prepared by the Scheme Actuary).
But insurance will not be the right end game for all and the Autumn statement paved the ways for more discussions on run on or consolidation. And the time is ripe for such thinking - 2023 brought us the first superfund deal – which, for some, paves the way for further new endgame options.
But this isn’t all that is on the ‘to do’ list for DB trustees over 2024 - over the forthcoming year trustees will also need to get to grips with the new DB funding code and the General Code.
During 2024 trustees will also want to consider how they can support in the energy transition and use their influence with investment managers to bring about social and environmental change. And it would be remiss not to mention AI – trustees will want to ensure that they understand the basics and the potential opportunities, as well as being aware of the risks – which should form part of the trustees’ cyber and data security risk assessments.
To support our trustee clients with planning for 2024, we have honed in on the five key priority areas to focus attention and resources. These are summarised below and with further supporting resources here.
Our five top trustee priorities for 2024
- Kick the tyres on your scheme(s) funding and investment strategy and endgame
- Get to grips with the implications of the new funding code and of the General Code for your scheme(s)
- Discuss with your administrators the timescales and plans for data work on GMP Equalisation and Pensions Dashboard projects
- Work with your investment advisers on how you can increase the social and environmental impact of your scheme(s) investments
- Take steps to understand the opportunities AI could bring to your members as well as understanding the risks
