Almost three-quarters (74 per cent) of trustees believe there is still more they need to be considering about the defined benefit (DB) funding regime, one year after it came into force, according to a recent LCP webinar poll.

The updated code, which was introduced in September 2024, was described at the time as one of the most significant developments for pension schemes since the 2005 Pensions Act.

However, pension schemes are still adjusting to the changes one year later.

During the LCP session, which featured input from The Pensions Regulator (TPR) lead actuary, Andrew Dodd, LCP experts emphasised the importance of trustees prioritising integrated risk management and understanding the flexibilities available within the code.

A key focus of the discussion was the assessment of the employer covenant, which LCP described as a “critical component” of the regime.

The consultancy advised trustees to take a proportionate approach by incorporating the new requirements without over-engineering their analysis.

Speakers also noted that the funding improvements following the 2022 liability-driven investment (LDI) crisis have sharpened focus on endgame strategies and surplus management.

Indeed, surplus extraction has now moved higher up the agenda, while superfunds are increasingly being viewed as a viable alternative to insurance buyouts.

Trustees were urged to weigh the different options carefully, recognising the distinct implications for members and sponsoring employers.

Meanwhile, investment strategy remains central to compliance with the code, and the webinar highlighted that the resilience test can sometimes yield unexpected outcomes - with higher-risk strategies passing and lower-risk ones failing.

Trustees were warned against increasing risk simply to pass the test, and instead encouraged to use the code’s principles to justify their chosen approach.

The new framework also introduces clearer expectations around actuarial assumptions, with expense reserves identified as an area of growing scrutiny.

LCP noted that for smaller, more mature schemes, these reserves can be material.

The firm stressed that trustees and employers should utilise the flexibilities within the code to tailor their approach to their individual circumstances and objectives.

Commenting on the findings, LCP partner, David Fairs, said the code represented a “meaningful evolution” in pension scheme management.

“It’s really important for trustees to understand that not everything in the code is as rigid as it first appears and that there are flexibilities to be used by schemes.”

Echoing this, LCP investment partner, Jacob Shah, stressed that now was the time for trustees to engage “proactively” with their covenant and investment advisors.

“This will ensure that their strategy is not only compliant, but that they meet the requirements of the code in a proportionate and pragmatic way,” he added.

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