Setting up long-term funding targets

Long-term funding targets are critical to regulatory compliance

The Pensions Regulator now expects all trustee boards to set long-term funding objectives. This involves putting together a suitable long-term funding target with a plan of how to achieve it.

Both target and plan must reflect individual scheme circumstances, including:

  • The scheme’s current financial position
  • The funding approach adopted, such as any contribution schedule in place
  • The current investment strategy and any changes as the funding level evolves.
Setting up long-term funding targets

Long-term funding review

We prepare a review, in which we put forward a potentially suitable long-term funding target along with a supporting rationale, meeting the expectations of The Pensions Regulator. The review incorporates our understanding of the scheme, its trustees and the sponsoring employer. We liaise with the Scheme Actuary as needed.

Our long-term funding target review includes a detailed report of advice and recommendations, providing:

  • Short-term and long-term risks
  • Financial modelling, which allows us to demonstrate the impact of different approaches on the funding position, and how it develops over time
  • Projections of likely scheme size at the point where the long-term funding target is likely to be reached
  • A suitable investment strategy for the point at which full funding is achieved
  • Cashflow information to support the modelled projections
  • Suitable timeframes for long-term funding targets, in line with regulatory expectations, allowing for the scheme’s maturity and investment approach, as well as any contributions received.
Setting up long-term funding targets

Long-term funding target advice

Within our advice, we fully consider the existing funding position and objective, investment strategy, and any deficit contribution schedule in place. Alternative long-term funding targets and investment policies are also considered and critically assessed.

We choose from a range of potential approaches to long-term funding in our advice, including:

  • Low sponsor dependency
  • Insurance buy-outs and buy-ins
  • Consolidation vehicles.

Why choose First Actuarial?

First Actuarial offers a cost-efficient approach for producing and agreeing a long-term funding target.

We have considerable experience in setting objectives, and have developed useful tools to support our clients.

Learn more about our long-term funding target service

Download our brochure

Get in touch

Get in touch with one of our investment consultants to discuss how we can help you.

Investment briefings

We produce regular briefings to update trends on the latest market developments.

They provide an excellent service by guiding those involved with the Scheme towards the Scheme’s Long Term Funding Target.

Monitor your scheme investments with First Actuarial’s Client Hub

Download our Client Hub brochure.

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First Actuarial case studies

The Kennel Club

Concerned about the risk of an Employer contribution increase as a result of high liabilities, Trustees of the Kennel Club Pension Fund turned to First Actuarial.

“They’re extremely professional and helpful. Their input always seems sound, logical and well presented. First Actuarial handled the transition well, they provide us with helpful guidance, and have delivered what they promised when they pitched for the work.”

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Royal Mail

The Communication Workers Union (CWU) enlisted the help of First Actuarial when Royal Mail proposed replacing its Defined Benefit pension fund with individual Defined Contribution arrangements.

“I can’t speak highly enough about First Actuarial – their people have been brilliant. The journey has been inspirational, nothing but a positive experience.”

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SBAC

As a result of an unusual clause in their trust deeds, Trustees of the pension scheme sponsored by the Society of British Aerospace Companies (SBAC) funded their liabilities on a buy-out basis.

“First Actuarial are very proactive. They respond quickly and get things done. They have proved to be competent and conscientious, and have a very professional and personable approach to business relations.”

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