In its latest ‘Excellence in Endgames’ paper, DB endgames: state of the nation, the leading pensions and financial services consultancy examines how the market has evolved since the reforms were announced in 2023. The paper outlines the evolution and the challenges facing DB schemes. It claims that while policy has adapted to the changing DB landscape as scheme face endgame, legislation alone won’t be enough to reshape it. The firm argues that that trustees and sponsors must work together and keep adapting as they assess the right endgame options for both the corporate and the member in this changing environment.
The leading pensions and financial services consultancy explains that over the last three years DB schemes have seen stronger funding positions, growing surpluses and an expanding range of endgame options. These have created opportunities but have also meant that schemes are facing increasingly complex strategic endgame decisions. While funding is no longer the primary challenge for many schemes, uncertainty around the use of surpluses, regulatory detail and decision-making processes continues to slow progress. The firm argues that trustees and sponsors must work together to develop clear decision-making frameworks, build alignment on long-term objectives and actively assess the full range of endgame options available to determine which approach is most likely to deliver the best outcomes for members and employers.
Commenting on what this means for trustees and sponsors, Laura McLaren, Head of DB Scheme Actuary Services, says: “The expanded range of endgame options has made decision-making more challenging. Trustees and sponsors are now navigating a more complex set of trade-offs, often without clear precedent, while also contending with ongoing regulatory uncertainty and differing stakeholder priorities. The challenge is less about access to options and more about how to navigate them effectively.
“In practice, one of the biggest barriers is alignment. Whether that’s agreeing objectives, defining roles, or building confidence to move ahead while the regulatory picture continues to evolve. Without a clear framework for comparing options, it can be difficult for schemes to make timely and well-informed decisions.
“To address this, trustees and sponsors should focus on early engagement, establishing a shared understanding of their long-term goals, and putting in place structured decision-making frameworks. Taking a proactive and collaborative approach will be critical to building confidence and ensuring schemes can move forward with clarity.”
Commenting on what this means for corporates, Leonard Bowman, Head of Corporate Consulting, Hymans Robertson, added: “The DB landscape has shifted significantly in a relatively short period of time, with many schemes now in a much stronger funding position than before. While this improved position is positive, it has also brought more complexity. With more choice comes more difficult decision-making, and complexity in advice frameworks. At the same time, we’re seeing continued innovation across the market, alongside a policy environment that is still evolving, which is prompting many sponsors and schemes to pause and reassess.
“It is important sponsors and trustees adopt a ‘common currency’ when evaluating the different options, using the same financial metrics and assumptions. Combined with starting with a principles-based discussion, this can quickly help all parties navigate to a common understanding.”
The firm warns that action is needed by trustees and sponsors to help navigate the different options available, and outlines key steps in their paper to help make decision making straightforward:
Establish clear decision-making frameworks to compare the growing range of endgame options
Clarify roles and responsibilities between trustees and sponsors to drive progress
Engage early to avoid delays caused by uncertainty
Monitor regulatory developments closely, particularly as further detail on surplus flexibility is expected
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