UK-based consultancy Hymans Robertson has published a checklist to help sponsors of defined benefit (DB) pension schemes establish a plan for run-on as they face a constantly shifting regulatory landscape.
In a recent webinar hosted by the firm, over half (52%) of attendees said that regulation posed the biggest risk to their run-on strategy. The checklist is designed to help DB pension funds minimise this risk and navigate their way “through the increasingly complex decisions”, the firm said.
Hymans Robertson listed the main steps for sponsors of DB pension funds looking to run on:
- consider whether run-on is the right option;
- define a shared long-term goal for the scheme’s future;
- align investment strategies and objectives;
- manage longevity risk;
- stay ahead of regulations and legislation;
- consider suitability of governance arrangements;
- consider accounting implications.
Commenting on the importance for DB schemes to follow a clear process in their run-on journey, Sachin Patel, head of corporate DB at Hymans Robertson, said: “It’s crucial that sponsors of DB schemes take a logical and thorough approach to planning their run-on journey. Of course, the first step in the process is to establish whether run-on is the right option for their scheme.”
He added: “If it is, corporates should take time to carefully consider the entire process holistically, and our checklist is a powerful starting point for this process.”
Patel also noted that one area that has seen significant regulatory development is around DB surplus extraction.
“The government’s direction of travel here is clear. It intends to harness a once-in-a-generation opportunity for sponsors and members to benefit from stronger funding levels. As these changes continue to emerge, high-quality advice will play a crucial role in helping corporates navigate complexity with preparation, clarity and confidence,” he said.
“As the old adage goes, failing to prepare is preparing to fail – and this is especially true for schemes looking to run on. Our checklist provides a useful roadmap for corporates to ensure they are as prepared as possible for this journey.”
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