Has your pension scheme strategy stalled?

Identify your ultimate goal and funding target

Discuss with the trustees the ultimate goal and funding target to ensure the pension liabilities are met and the employer’s obligation is extinguished. Generally this is beyond the deficit (and employer contribution payments) that has been agreed as part of the last actuarial valuation. The extra costs reflect the need to create certainty for the pension payments.

Define the project scope, objectives and timing

Too often we find that stakeholders are moving along with only a very high-level strategy for their DB pension scheme such as ‘to have a self-sufficient scheme'. Alternatively they enter into the de-risking process without defining their measures of success and with only a rough idea of how long they expect it to take.

This can be remedied by building comprehensive scenario planning in conjunction with the scheme advisers. It can be the case that the scheme sponsor has assumed the trustee board has a detailed plan, but trustees have assumed that advisers will keep things moving and so have not requested as much clarity on timings as they might. This allows each stage to slip, ultimately leading to delays and causing rushed decisions to be made which may impact bargaining power.

Actions here include:

• Agree, in writing with the trustees, the objective and desired timeline with your trustee board
• Request a copy of the project plan being used by the trustees – and schedule a session with the trustee board and advisers to run through the details and ask your questions
• Schedule progress meetings at each key stage of the process and include a regular refresh of the plan

Streamline your governance

For many pension schemes looking to reach their goals it can be helpful to streamline the teams involved. Many LawDeb clients have moved to the sole trustee model of pension trusteeship to ensure that the trustee can work efficiently with the sponsor and keep things progressing when working towards buy-out.

Sole trustees are not just one person, they tend to be a small team from an independent professional trustee firm with experience of similar scenarios and who will action them without the need to spend time educating the wider lay-trustee board. Similarly, appointing one adviser for multiple services can help to keep communication flowing between stakeholders and other time efficiencies.

To find out more contact one of our team or download our sole trustee brochure from the side of this page.

*https://www.hymans.co.uk/media/uploads/db-pensions-cfo-perspective.pdf