Defined benefit pension schemes should stop de-risking once they decide to pursue run-on, according to LCP’s partners Jacob Shah and Jonathan Wolff, who argued that traditional risk-management instincts could destroy long-term value.
The duo made the case at LCP’s annual DB pensions conference in London on Wednesday, in a session titled “Is it time to stop de-risking?”
Shah said that “it’s time for DB pension schemes to stop de-risking”, while acknowledging that the statement would be somewhat controversial.
“The idea is that you need a mindset shift once you choose to run on,” he said. “Because applying some of those instincts that served us well in the past might drive sub-optimal decisions that destroy long-term value in future.”
The argument comes as DB schemes consider a wider range of endgame options. LCP’s conference, which was held at London’s Barbican Centre, included a session examining options ranging from superfunds, alternative consolidators and traditional insurance de-risking to low-risk or surplus-generating run-on.
During the de-risking session, Wolff framed the debate around the interaction between investment strategy and covenant strength, asking what happens when an investment adviser and covenant adviser consider run-on and surplus sharing.
His argument was not simply that pension funds should take more investment risk, but that schemes pursuing run-on may need to reconsider the assumptions underpinning conventional de-risking strategies.
Shah said the issue was about recognising that decisions appropriate to a scheme seeking an insurance-based endgame may not necessarily be appropriate for one intending to remain on a run-on journey.
The question of how schemes should approach their endgame was also explored in a separate session, “Endgame after Stagecoach: what is now possible, credible and attractive”.
The panel included Rob Andrew, head of UK pension strategy and solutions at Aberdeen, alongside representatives from LCP, M&G and TPT.
Aberdeen officially became the new sponsoring employer for the £1.2bn Stagecoach Group Pension Scheme in December 2025. This landmark agreement shifts control from the transport operator to the asset manager.
The discussion covered superfunds, alternative consolidators, traditional insurance de-risking and different forms of run-on, highlighting the expanding range of options available to DB schemes beyond a straightforward buyout.
The session also provided a wider context for Shah and Wolff’s argument: for schemes choosing to run on, the key question may increasingly be how investment and covenant strategies should evolve once buyout is no longer the intended destination.
