What the new long-term funding target means for trustees and how good governance can help them stay in control of this target…
Setting a long-term funding target (LTFT) will be an important focus for many trustee boards this year. In this paper, we look at what this new target means for trustees and demonstrate how good governance can support trustees in staying in control of this target.
This year's annual funding statement from The Pensions Regulator set an explicit expectation for schemes to think about investing and funding towards an LTFT. For the first time, there was a strong steer for trustees to think beyond technical provisions, to consider a target which reflects their ultimate objective, such as self-sufficiency or buyout. We believe that thinking about your scheme in this way is vital for long-term success, but it's not without challenge - often there is a stark difference between a technical provisions and a self-sufficiency or buyout basis.
Regardless of the target that has been set however, we believe that an essential element for success is the implementation of a measurable plan in place to get there.
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