Valuations are the highest priority for most pension schemes, despite accelerating funding levels and the introduction of new regulations in the Pension Schemes Act 2021 and the delayed DB Funding Code, research from LCP has revealed.

LCP’s latest Chart Your Own Course report found that the majority of schemes are seeing funding levels improving due to additional contributions and the impact of market conditions, such as spiralling inflation and rising gilt yields.

The report also found that improvements were most marked on a buyout basis, with 20 per cent of schemes seeing more than a 7.5 per cent funding level improvement, meaning that more schemes may find themselves at the buyout funding point years ahead of their original target.

With an increasing number of schemes now potentially on an accelerated path towards their chosen endgame, LCP has warned schemes that they need to be nimble and responsive rather than focusing attention on routine regulatory requirements like valuations.

The report also found that many schemes were in favour of the pace of volume of regulation being slowed.

LCP has warned that there is a real risk that, with so many new requirements, schemes may opt for minimum compliance instead of embracing the spirit, and therefore the right governance structure and prioritisation is key.

Buyout remained the most favoured ultimate objective, the report also discovered, with more than 60 per cent of respondents targeting this, over double the number targeting long-term run off.

The survey found that over 95 per cent of respondents had at least discussed their journey plan as a trustee board, but only a third of schemes had both agreed their plan with the sponsor and formally documented it.

LCP partner, Mary Spencer, commented: “The world of DB pensions is moving fast, with dramatic shifts in market conditions which can have profound implications for scheme strategy.

“Our survey shows that many schemes are still prioritising three-yearly valuations, which may well be out-of-date by the time they are completed, but we see a future where this process is largely redundant.

“Trustees who instead prioritise agreeing a clear long-term plan and keep it under constant watch as market conditions evolve will be best placed to deliver the best outcomes for members This is especially important as the economy gets buffeted by spiralling inflation and a cost-of-living crisis.

“This year’s results also show that the pensions industry is crying out for simplification, consistency and a slowing of the pace of new requirements, which we certainly sympathise with.”

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