Report on end game strategies for UK pension schemes
Clear thinking ahead
UK final salary occupational pension schemes are in decline. Most are now closed to new employees joining and some are closing to employees already in the scheme. These schemes will continue their progression from a core employee benefit to a complex and risky financial liability. Managing these liabilities creates little upside opportunity for companies but instead poses significant financial risks and ties up precious management time.
We believe this leads to the concept of the End Game in UK pension schemes: the beginning of the approach whereby a company and its trustees start to consider the final settlement of pension scheme liabilities at some point in the future. For some, the End Game could be many years from now, requiring a carefully managed programme to control risk until that point is achieved. For others, the End Game may be in the near future. The dramatic growth in the number of insurers seeking to acquire these liabilities from organisations is driving a growing market in accelerated settlements.
We surveyed a broad cross section of pension scheme trustees to find out what risks and liabilities they viewed to be of the most concern for their pension scheme and if trustees are addressing the potential factors affecting buy-out of a scheme’s liabilities. Surprisingly, the results indicated that trustees in general do not appear to be addressing the issues associated with the End Game yet and many believe that schemes will run for the longer term, paying pensions out over time. This provides sponsoring companies, who are independent from the trustees, the opportunity to take the initiative and drive consideration of the End Game forward.
For further information, download our publication Report on end game strategies for UK pension schemes. (PDF, 1403KB)
Read our related press release Wake up call for companies as UK employee pension schemes face the end game.