Nearly half of all DB pension schemes (45%) submitting valuations in 2021 lengthened their recovery plan end date, compared to just over a third (35%) the year before, according to the latest benchmarking analysis from Hymans Robertson. The first report on valuations post Covid-19, found that while markets recovered quickly from the initial shock of the pandemic, challenges remained.

Research undertaken by the leading pensions and financial services consultancy also reveals that the average recovery plan length has increased to 6.4 years from 5.9 years in 2021. Nevertheless, the recent rises in gilt yields are likely to have brought some good news for schemes with less hedging in place.

Commenting on the benchmarking analysis, Laura McLaren, Partner, Hymans Robertson, says:

“With the impact of the Covid-19 pandemic still being felt by economies, not least through the strong inflationary headwinds and ongoing certainty, it is good to see that, in general, the health of schemes is continuing to increase. Any further rises in gilt yields could see further reductions in liability values.

“With regulatory change building for some time, we expect the New DB Funding Code to arrive before the end of the year bringing further clarity. Before this takes place there is a good opportunity to use TPR’s analysis to benchmark current funding plans against today’s best practice. Benchmarking offers valuable insights into where TPR might ultimately set the ‘Fast Track’ parameters and will help schemes identify the key actions to take on covenant, investment, and funding to prepare for going ‘Fast-Track’ or ‘Bespoke’.”

A copy of the fourth annual benchmarking report can be found here.