Is your scheme ready for Fast Track?

Welcome

This tool shows whether your scheme's strategy will pass The Pensions Regulator's (TPR) new 'Fast Track' funding regime, or what changes might be needed to pass 'Fast Track'.

You will need the following information to use this tool (approximate figures are fine, as this is an approximate model).

  • Your sponsor covenant rating
  • A Technical Provisions (TP) liability value and discount rate
  • The proportion of your liabilities that relates to pensioners
  • Current asset value, with its allocation to growth/income assets and hedging level
  • Recovery plan length and annual amounts

The Pensions Regulator has not yet disclosed the final parameters for Fast Track, but this model can help you understand which areas you may need to focus on.

You can also use it to test what would happen if you had a change in covenant, funding or strategy.

Begin by inputting information about your scheme using the three tabs below (and flex to see changes).

This tool is designed to give a broad comparison of an individual scheme's strategy relative to The Pensions Regulator's (TPR) Fast Track based on TPR's March 2020 consultation document. This tool does not constitute advice and must not be relied upon. By using this model, users implicitly agree that Hymans Robertson LLP are not to be liable in any way.

We have parameterised the Fast Track tests using the illustrative guidelines tables in TPR's consultation. These were published by TPR in an incomplete and indicative format. There is material uncertainty about the parameters TPR will set for the final DB Funding Code. So, this tool is approximate and users should only use this tool as a possible indication of impact.

The scheme specific modelling uses a high-level approach, based on the characteristics of a typical scheme. The key assumptions in the model within this tool are:

  • The duration of pensioners and non-pensioners is 13.5 and 24 years respectively
  • The inflation sensitivity of the scheme liabilities is 70%
  • The asset stresses are based on the PPF stress test

How we have approached the Fast Track Tests

To make this tool easier to use we have simplified the Fast Track tests (and the scheme information needed to do them) in the following ways:

Long-term objective test: expressing Technical Provisions discount rates in a 'gilts+' format, split pre and post retirement; then comparing the post-retirement TP discount rate to a Fast Track Long Term Objective discount rate of gilts + 0.5%.

Recovery plan test: allowing for regular annual deficit reduction contributions over a fixed recovery plan length. Recovery plans with 'back-ended loaded' contributions are unlikely to be allowed in Fast Track.

Investment stress test: using the PPF's standard investment stress and a simplified grouping of asset allocation into growth (for equities etc), income (credit, property etc.) and a hedging level (as a percentage of TP liabilities).

Future service test: this test is not currently included within our tool.

For further information please get in touch with one of our experts or your usual Hymans Robertson contact.