If you are a trustee , you don’t need to look outside the tent to get help with your pension strategy.
Independent Governance Group (IGG) has launched its Strategic Pension Solutions Centre of Excellence. It is effectively a resource for those procuring services trustees need to run their scheme on.
The firm’s offering will provide support to schemes who are planning their endgame strategies – including managing surplus and run-on. IGG will help establish a strategy which meets the needs of sponsoring employers, trustees and defined benefit (DB) scheme members.
IGG claims the centre will bring together investment, actuarial, legal and covenant experience to assist schemes with the “rising complexities” of navigating DB scheme endgame strategies. Effectively it is a one stop pension shop.
Research conducted by IGG to coincide with the launch of the centre showed almost one in three (32%) its schemes are aiming for low-dependency or a bulk annuity transaction as their endgame strategy, while nearly three-quarters (72%) have called for a statutory override to allow ongoing surplus distribution. (Even allowing for rounding this doesn’t quite add up to 100!)
Separate analysis from The Pensions Regulator found 3,750 of 5,000 DB schemes were described as being in surplus on a low dependency basis, with an additional 950 said to be nearing the same level of funding.
IGG trustee director and head of strategic pension solutions David Farmer said:
“With an increasing number of DB schemes being well-funded or even over-funded, many sponsors and trustees are exploring alternatives to traditional buyouts and buy-ins with insurers. IGG’s new Centre of Excellence is designed for those schemes where a buyout or buy-in may not be the optimal solution, necessitating a thorough evaluation of all viable options.
“Our research indicates that despite a robust pensions market, a cautious approach to surplus management remains prevalent. Trustee directors prioritise maintaining a funding safety margin, adopting a low-risk investment strategy, and ensuring a strong employer covenant. I am thrilled to leverage our expertise to enhance IGG’s existing offering and position our Strategic Pension Solutions unit as a crucial support for sponsors and trustees evaluating all their options.”
IGG chief executive Andrew Bradshaw added:
“The launch of our Strategic Pension Solutions unit is another stand out development for IGG and complements our existing strengths and services. It shows our ability to respond directly to the changing nature of the UK pensions industry and demonstrates our capacity to quickly identify and meet shifts in sector demand.
“Schemes in surplus have in excess of £225bn in aggregate surplus assets, representing roughly 17% of total DB assets. It is never a case of ‘one-size-fits-all’ when it comes to scheme management, and our new Centre of Excellence will support in the decision-making process where factors at play continue to evolve.”
I’m thrilled too, because in the current climate, it is the trustee that is lagging in adapting to the new paradigm. Pensions should not be the quietest graveyard. Surplus should be used for good and good can include equalising benefits between those with DB accrual and those with DC pots.
I’m thrilled because some schemes in the PPF assessment today, need only a c0-sponsor to be running on tomorrow.
And I’m thrilled because IGG are prioritising running on to pay full pensions and pension surpluses to millions of savers and prospective pensioners.
Hats off to David Farmer and Andrew Bradshaw.
