One in five defined benefit (DB) schemes are in The Pension Regulator's (TPR) weakest two categories, analysis by Hymans Robertson has revealed.
In its annual funding statement, published in March, the regulator had graded schemes into one of five categories - A to E where A was the strongest category and E was the weakest - taking into account covenant strength, scheme maturity, recovery plan length, and funding targets.
Hymans Robertson has today (22 August) published a benchmarking report for the DB universe analysing the results and revealed only half of DB schemes were in the A category, while a fifth were in D and E - the weakest classifications.
Those in category D were rated as having a tending to weak covenant strength, a long recovery plan and/or a weak funding target. Those in category E were found to be a stressed scheme with a weak employer covenant.
Those schemes graded in the weaker classification are more at risk of receiving regulatory intervention from the strengthened regulator.
Hymans Robertson also revealed more than a fifth (22%) of trustees had already been subject to, or expected to experience, intervention from TPR before their next valuation.
Partner Laura McLaren said this year's funding statement was the regulator's "clearest to date" on the expectations it has for DB schemes.
She said: "Additional scrutiny and change is on the horizon in the form of a new DB funding code, as well as stronger regulatory powers for TPR, and we expect that most trustees and sponsors will now have to work harder to demonstrate they have a clear funding plan in place.
"Fairly straightforward steps such as understanding how a DB scheme compares to others and crucially, how it may be perceived by TPR, will be advantageous. For example, this may allow schemes to prioritise any required changes and identify where they might be taking unnecessary levels of risk."
This comes after the watchdog set out its expectations of DB trustees and employers' funding and risk approaches, following plans for it to become a "clearer, quicker and tougher" regulator.
TPR is expected to issue a consultation on a revised and more stringent funding code for DB schemes this summer.
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