Lincoln Pensions, a specialist pensions covenant advisory firm, has launched PensionSketch, an integrated scheme projection and risk modelling tool, enabling trustees and sponsors to map out the journey plan which best balances all key risks.
PensionSketch uses a scenario-based approach to plotting a journey, which integrates both sponsor and scheme modelling. The tool also includes a risk radar that provides a dynamic assessment of the risks that each potential journey plan entails.
PensionSketch is designed to improve the journey planning process in three key areas:
• End-state decision-making – enabling decisions to be made in the context of long-term covenant reliability.
• Journey plan length – which can be benchmarked relative to covenant visibility.
• Investment risk – which can be considered relative to sponsor risk capacity.
The new tool has been created ahead of The Pension Regulator’s new funding code of practice, which is expected to place increasing emphasis on journey planning. The funding code is also likely to benchmark acceptable fast-track valuation submissions relative to both scheme maturity and covenant strength.
As a result, journey plans need to be considered in the context of a covenant that supports a scheme until it reaches its end state, with covenant affordability and visibility informing what end-game is appropriate, when it should be reached, and how schemes can get there.
Michael Bushnell, Managing Director of Lincoln Pensions, says: “The TPR’s funding code has given the industry a new focus, as schemes will now need to incorporate funding, investment and covenant variables into different journey plan scenarios. In response, we’ve created PensionSketch, the first fully integrated journey planning tool. PensionSketch is unique in modelling both the scheme and sponsor, allowing for a dynamic assessment of scheme risks relative to sponsor support mapped across a range of scheme’s possible journeys. More than ever, schemes need to be thinking about the long term across a range of risk scenarios and we hope this tool can be additive to their journey towards securing member benefits.”
The development and launch of the PensionSketch tool follows that of Lincoln Pensions other proprietary technology programme, the highly successful and award winning PensionSim scheme scenario simulator.
