The Pensions Regulator’s guidance to trustees following the vote to leave the EU- PwC comments

Published at 12:23 PM on 15 July 2016

Following The Pensions Regulator publishing guidance to trustees following the vote to leave the EU, Richard Cousins, pensions consulting partner at PwC, said:

"It is important that sponsors and trustees carefully consider the impact that the potential of a continued low interest rate environment may have on both funding and investment, and if long term expected asset returns are appropriately reflected in their valuations.

"We may be in a new economic era and traditional actuarial models may result in precisely the knee-jerk reactions the regulator has warned against, without proper consideration."


Stephen Soper, senior pensions adviser at PwC, said:

“This new guidance highlights the increasing importance of trustees and their sponsoring employers understanding their future cash flows and their ability to absorb and respond to risks as their pension schemes mature. Understanding the strength of employer covenant, the factors that may cause support to falter and developing credible mitigation plans are now an imperative feature of scheme governance.”


Julia Dickson, pensions credit advisory partner at PwC, added:

“Whilst there will be many possible business plan scenarios being developed, trustees should understand the dependence of corporate cash flows on exchange rates, EU employees, imports and exports from which to consider positive and negative impacts at this stage.

“Trustees should also take the time to ensure that they understand any proposed changes to the corporate’s investment strategy, and how this may impact on affordability. If employers are cutting back on their planned capital expenditure, trustees should assess whether this could affect anticipated growth plans. Trustees should also ensure that they are aware of any proposed changes to dividend policies to ensure there is a balance between deficit repair contributions and dividends.

“For pension schemes not currently in the valuation cycle, it could be valuable to increase or bring forward any regular covenant monitoring.”


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