The newly launched hub includes a decision-making tree to help identify the optimal Plan A endgame in this new environment. It highlights that while buy-out will remain a Plan A for many DB schemes, for others alternatives such as managed run-off, alternative risk transfer and superfunds will be their Plan A.
The leading pensions and financial services consultancy also suggests that, while many schemes may have a Plan A in place for the endgame, few have a dynamic endgames strategy which considers an actionable Plan B. The decision-making tree is designed to cut through complexity, identify the right endgames strategy for a scheme, and help develop and execute a plan that puts member outcomes at its heart.
Commenting on the new hub, Calum Cooper, Head of Pension Policy Innovation, Hymans Robertson, said: “A highly energised risk transfer market and the emergence of new provider solutions means DB schemes have a lot to think about when it comes to endgame planning. So, a dynamic endgames plan that can handle alternative futures is a must for DB schemes. It’s not just a case of buy-out vs run-off. There are many flavours of both DB endgame and run-off, and therefore many different factors to consider – from scheme size to stakeholder beliefs.
“Endgames is plural because no set plan survives first contact with markets. The ability to adapt and even to pivot to Plan B, if needed, will improve outcomes. So that’s why we’ve created our ‘Excellence in Endgames’ hub and decision-making tree to help schemes deliver better, balanced outcomes in the face of uncertainty. Schemes can thrive by having two possible endgames: a Plan A for core strategy and a complementary Plan B to which it can pivot in case of adversity. The questions in the decision-making tree help schemes identify a Plan A with further guidance for developing a Plan B.
“After decades of dealing with deficits, The Pensions Regulator estimates that the average scheme is now fully solvency funded, meaning risk transfer could be viable in a relatively short time frame. But preparing for risk transfer and ultimate buy-out is a long and expensive process. Making an informed decision at the outset of that programme of activity is vital.
“The way ahead may feel like a maze, but our insights hub will help schemes find the right routes through it.”
The Hymans Robertson Excellence in Endgames insights hub and decision-making tree can be found here.
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