Scheme wind-up (DB)
The process of efficiently achieving scheme wind-up requires a specific set of trusteeship skills
Over two thirds of defined benefit pension schemes are closed to new entrants. The strategic end point for the majority of these schemes will be discharging the benefits and seeking bulk annuities scheme wind-up. Wind-up may also be optimal as part of company restructuring or a broader corporate strategy.
Once wind-up is achieved there will be no ongoing running costs, no funding uncertainty and the scheme will be removed from the sponsor’s balance sheet. Most importantly, members will receive their benefits in full when possible.
The timing of the path to a bulk annuities scheme wind-up will vary because of a number of factors:
- the funding position of the scheme – better funded schemes, all else being equal, will be able to achieve buy-out sooner.
- the ability of the sponsor to fund the Scheme to the buy-out level.
- the investment strategy and the level of return achieved by the scheme investments.
- insurance market pricing.
- the “buy-out readiness” of the scheme – including the quality of the scheme data and the clarity of the scheme Rules.
- the approach to buy-out. Some clients wish to insure all benefits in full as soon as possible. Others seek to offer transfer values, early retirement options and winding-up lump sums with a view to granting members greater flexibility en route to eventual buy-out and wind-up.
The process of efficiently achieving a bulk annuities scheme wind-up requires a further set of trusteeship skills above and beyond running a scheme in an on-going scenario. The Dalriada team has wound-up over 300 pension schemes. Our skills and approach are unique:
- we work strategically to help the sponsor understand the most efficient timescale to achieve buy-out and explain the risks inherent in different investment strategies over the period.
- we work collaboratively with co-trustees, sponsors and advisers to provide specialist buy-out advice. We know the ultimate objective – the move to buy-out – is consistent.
- our team-based approach ensures that we have visibility of the very best market practice in the buy-out sector. We know what good advice and competitive pricing looks like and we ensure we obtain this for our clients.
- Attend and participate in trustee meetings.
- Work collaboratively with existing trustees and sponsoring employers.
- Provide unique innovative approaches to the challenges schemes face.
- Monitor the scheme's investment strategy and performance.
- Provide strategic direction.
Chair of trustees
- Provide input and prepare agenda for trustee meetings.
- Attend and chair trustee meetings.
- Review and approve the minutes of the meeting.
- Monitor actions arising and feed back on progress.
- Also a strong, experienced and knowledgeable independent trustee.
- Experienced team working behind each sole trustee.
- Single point of contact.
- Work closely with the scheme’s service providers and advisors.
- Reduces need for sponsoring employer monitoring.
- Invite employer and stakeholders to attend formal trustee meetings.
- Maintains high quality professional services.
- Strategic direction and full control.
- Single point of contact.
- Saves scheme time and money.
- Access to our ground breaking technology, Mantle®.
- Live administration and actuarial data.
We are collaborative
We operate a team-based approach.
We can professionally project manage where appropriate.
We harness the skills within our team – data-cleansing, GMP recs, investment, legal, covenant – to deliver efficiencies