Aon Hewitt, the human resource solutions business of Aon plc, has launched Pension Scheme De-risking - a Practical Guide. The guide provides advice to trustees and sponsors on how to plan a de-risking strategy and follows on from Aon Hewitt’s Mid-Market Pension Survey, released earlier this year, which looked at the key issues facing the UK's medium-sized pension schemes.
Paul McGlone partner at Aon Hewitt said:
“This year's Aon Hewitt Mid-Market Pension Survey found that over 80% of UK pension schemes with assets up to £500m are now closed to new entrants and that 40% have also closed to accrual. As schemes increase in maturity, both scheme sponsors and trustees will consider their plans for reducing scheme risk. This guide is designed to aid them in that process, assessing how prepared they are for de-risking and helping them to plan their approach – including, crucially, the development of a flight plan.”
The guide covers the following issues:
• Setting funding targets and flight plans in order to define what ‘de-risking’ means for individual pension schemes.
• How trustees and sponsors can monitor the process once the flight plan is set.
• Taking advantage of de-risking opportunities arising from influences outside the control of schemes.
• How to incorporate liability de-risking into a flight plan.
• Dealing with challenges and threats during the course of a flight plan.
• Actions that pension schemes, trustee boards and pensions teams need to perform to ensure the scheme is ready to take advantage of opportunities.
• How trustees, pensions teams and interactions with third parties may need to change for a de-risking strategy to operate effectively.
Paul McGlone continued:
“De-risking a pension scheme is a long-term project with plenty of moving parts. The best de-risking plans will include details of the ultimate target, the clear steps needed to be taken along the way and, perhaps as importantly, a clear vision of the operational model required to make sure the flight plan is delivered. The most critical aspects are to set the right targets and to introduce the correct structures so that trustees and sponsors are in the best position to make prompt and well-considered decisions.”
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