Hymans Robertson | DB scheme governance structures must be more responsive for endgame

8 June 2022

Hymans Robertson publishes: “Many companies with DB Pensions Schemes are not giving enough focus to having the right governance structure in place for their endgame journey claims leading pensions and financial services consultancy, Hymans Robertson. It warns that for a scheme’s endgame strategy to be a success its governance structure must allow it to make many timely decisions and to respond to changing circumstances, yet many schemes simply aren’t set up for this.

Joint company/trustee working parties, supplemented with joint scheme monitoring frameworks, can be a highly effective way to improve a DB Scheme’s day to day channels of communication. Many companies and their scheme trustees need to implement these so that the vast array of tactical decisions required to keep a scheme’s endgame strategy on track, can be made quickly and with a clear focus on the endgame objectives.

Commenting on the need for governance structures to meet the needs of rapid decisions in changing circumstances, Leonard Bowman, Head of Corporate DB Endgame Strategy, Hymans Robertson, says:

“While we were aware that many schemes aren’t giving enough priority to governance structures as part of their corporate DB endgame planning, our views were backed up by a poll at one of our recent webinars. Less than a third of respondents (29.6%) of Company respondents agreed that their governance structure would allow for rapid investment decisions to respond to changing circumstances. Over half (55.6%) said that there was room for improvement while 14.8% said that their governance structure did not enable this.”

Adding his thoughts on the need for communication and collaboration between the corporate and trustees on endgame strategy, Leonard continues:

“There is good news, however, as we see indications that schemes are working collaboratively on decision-making around their endgame strategy. The vast majority (85%) said that they expected decision making around risk transfer to result from joint company and trustee discussions. Timely risk transfer activity takes careful planning, monitoring and the ability to move quickly when opportunities in the market present themselves.

“It is also encouraging to see more and more schemes opening lines of communication between the corporate and the trustee on endgame strategy. As an example of how essential this is, 90% see member options as playing a part in the endgame strategy, which can only happen effectively if the Company and the Trustee work closely together.””

Source: Hymans Robertson