Now is the "perfect time for trustees to “spring clean” funding and investments to-do lists, Broadstone has suggested, after its analysis revealed that hedged schemes experienced very little change in their funding position despite gilt yield rises through February.

The Broadstone Sirus Index reported that, whilst gilt yields rose and growth assets fell over the month of February, resulting in smaller asset, liabilities and, therefore, deficits, the combined impact of these changes for the fully hedged scheme was to maintain its position, while the 50 per cent hedged scheme experienced a slight increase in their funding level.

Broadstone’s analysis additionally revealed that buyout funding improved over February, with a £0.5m reduction in deficit for fully hedged schemes, and a £1m reduction for 50 per cent hedged schemes.

Low dependency funding for fully hedged schemes also remained stable, while half hedged schemes benefited from 2 per cent rise to 97.5 per cent.

Following the analysis, Broadstone suggested that now is the time to focus on the practicalities of insurance readiness and review liability matching, stating that, with an uncertain economic outlook, it is the “perfect” time for schemes to give funding and investment to-do lists a “spring clean”.

In particular, ahead of the March round of trustee meetings, Broadstone head of trustee services, Chris Rice, suggested that schemes should be addressing their funding position and ensuring their journey plan is on target.

He continued: “In some cases, trustees will see they are ahead of where they thought they would be, which does present its own challenges.

"For instance, if buyout is the target for the scheme, suddenly being in striking distance will bring into sharp relief the work required to get the scheme insurer ready, funding strategy is only one part of this equation.

“Administration and data will need detailed review and legal review of documentation is integral to getting a deal over the line. Trustees underestimate those exercises at their peril. Trustees and sponsors without a clear buyout plan should do what they can to put one in place."

Adding to this, Broadstone head of investment consulting, Marc Devereux, stated that trustees should also take the chance to review their liability matching assets, noting that events across September and October prompted most trustees using liability-driven investments (LDI) to review these arrangements, including levels of leverage, resilience, and governance protocols.

“Some trustees may find they can hedge appropriately with lower, or no, leverage, while others will be reviewing their collateral arrangements and the overall impact on strategy," he continued.

"We continue to work with our clients to understand their specific position and ensure aspects of funding and investment strategy are reviewed appropriately.”

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