Why would a DB scheme choose to run-on?

There are many reasons why a scheme may or may not choose to move to buy-out once it can afford to do so. This includes: Upside for members: Benefits are locked in as part of a transaction removing the potential for future discretionary increases. Running the scheme on to generate surplus could lead to improved benefits for members. Upside for sponsors: Sponsors may prefer to retain upside and risk, rather than pay away the potential surplus to an insurer. Possible benefits include cash savings by using the surplus to meet ongoing pension costs for current employees or refunds to support growth. Control: Trustees and sponsors may have concerns around relinquishing control of the scheme. This includes passing the administration and ongoing communications to a third party where they have no influence on standards or level of member experience.

Will CDC pensions give me a better retirement income than DC?

LCP modelling suggests CDC pensions could deliver up to 50% higher income compared to traditional annuities and 15-25% more than high-conviction DC drawdown strategies.

Pensions and benefits

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Explore answers to commonly asked questions about pensions.

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There are many reasons why a scheme may or may not choose to move to buy-out once it can afford to do so. This includes:

Upside for members: Benefits are locked in as part of a transaction removing the potential for future discretionary increases. Running the scheme on to generate surplus could lead to improved benefits for members.
Upside for sponsors: Sponsors may prefer to retain upside and risk, rather than pay away the potential surplus to an insurer. Possible benefits include cash savings by using the surplus to meet ongoing pension costs for current employees or refunds to support growth.
Control: Trustees and sponsors may have concerns around relinquishing control of the scheme. This includes passing the administration and ongoing communications to a third party where they have no influence on standards or level of member experience.

: LCP modelling suggests CDC pensions could deliver up to 50% higher income compared to traditional annuities and 15-25% more than high-conviction DC drawdown strategies.