Schroders has today announced the launch of Flight Path Swift, a uniquely flexible defined benefit investment solution for smaller pension schemes, designed specifically to focus on increasing funding level protection.
Made up of best practice investment building blocks of both growth[i] and matching assets[ii], Flight Path Swift provides an integrated decision making and investment framework.
With Flight Path Swift, the scheme's funding level is monitored daily against its pre-agreed triggers and action is taken when a trigger is met.
A recent independent survey[iii] undertaken by UK pension scheme managers, trustees and independent consultants provides a key insight into pension scheme funding and decision making. Our survey has provided further evidence as to the importance of trustees having a plan that allows them to manage funding level risk effectively. Respondents were asked:
- ‘Has your scheme been fully funded over the last 10 years?' 44% of respondents said yes, 56% said that it had not. However, when we went onto ask ‘Is your scheme fully funded today?' only 6% said their scheme was fully funded, leaving 94% of the respondents with a short fall in their pension scheme
- ‘How often do you monitor your scheme's funding level? Only 2% monitored daily, 7% weekly, 32% monthly, 46% quarterly, 12% annually and 1% only monitored their scheme's funding level at triennial valuations
- ‘How much time does it take for a strategy decision to be implemented?' 33% of the respondents answered within a month, 31% of respondents said within a quarter, 19% said longer, 11% said within a week and 6% said immediately
Mark Humphreys, Head of UK Strategic Solutions, commented:
"At a time when pension scheme trustees are looking for comfort that funding level risks are being managed, we have created a best practice investment solution at an affordable fee for pension schemes of all sizes - many of which historically would have been too small to access such a solution. We are able to do this by focusing on the core elements of the existing well-established Schroders Flight Path offering. The fee structure of Flight Path Swift is totally transparent, reflecting a building block design, with a low minimum fee.
"Every element of Flight Path Swift has been designed with ease of use in mind, from the documentation to the straightforward way you can invest and change the strategy. Clients and their advisers are involved in the big decisions- we can take care of the rest."
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