Sponsors have good reason for optimism. Our research suggests that for around half of the UK’s largest DB sponsors, schemes could currently be fully funded on the kinds of “low reliance” long-term funding measures that we expect could emerge under the new funding regime.
Whilst this is good news, uncertain headwinds mean challenges remain and the decisions made collaboratively by sponsors and DB trustees today, such as whether to now target an insurance exit and how to do so most efficiently, could have a profound impact on how their schemes evolve.
What's inside Leading the way?
This report provides fresh views on how sponsors can drive collaborative journey planning with Trustees. Key themes we explore include:
- How well funded are UK defined benefit schemes as we emerge from the pandemic?
- Could new regulatory requirements enhance the business case for progressing to an insurance solution sooner rather than later?
- How can innovative investment or other new approaches be used to maximise cash efficiency in journey plans; and
- How are contingent funding solutions continuing to evolve to meet both trustee and sponsor objectives?
For companies wanting to target buy-out, we predict that managing this journey in as cost-effective a way as possible will become a key strategy goal in coming years, for example encompassing a range of innovative contingency planning, investment, and liability management measures.
How we can help
Contingent funding approaches are rapidly becoming more widespread. They can be a great way to protect member benefits as well as the shareholders and other creditors of the sponsoring employer.
We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.
Whether to enter a DB Consolidator is a complex decision. Sponsors and Trustees must be sure it is the right decision for their scheme and its members. We can help.
We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.
We work with you and your finance team to ensure that your ongoing statutory duties and compliance exercises are done quickly, efficiently and accurately.