The effects of the current economic volatility are being felt by everyone but especially by those running defined benefit (DB) pension schemes in the UK. Results from Professional Pensions' Pensions Buzz survey revealed 43% of respondents felt their scheme had moved closer to endgame because of market turbulence. The Mini Budget delivered on 23rd September sent pension schemes, trustee boards and sponsors into chaos. Long-term gilt yields are now at an almost 15 year-high, and liabilities have dropped significantly for many schemes, which have improved their funding levels and have brought some schemes much closer to endgame than expected. So, what does this mean for your scheme?

This session will address:

• How did the events of 2022 affect the bulk annuity market?
• How can schemes be opportunistic in the 2023 market environment?
• What should schemes and their advisers be thinking about before approaching the market?
• How can schemes stand out in a busy market?

The Pensions Regulator’s new Funding Code of Practice will set in stone the need for all schemes to reduce the risk they are taking as they get more mature. But how should you go about doing that, especially given how volatile investment markets can be?

Chris Ramsey will illustrate just how significant market volatility can be on a scheme’s journey and give his view on how trustees and employers can identify and capture good de-risking opportunities, helping them to reach their end goal.

BTPS is one of the largest corporate pension schemes in the UK with £47bn in assets and 270,000 members. Over the last few years BTPS has invested heavily in people, processes and technology. It bought member administration in-house, repatriated its call centre and introduced a new member administration platform improving member satisfaction exponentially. It has reduced its deficit from c. £11bn in 2019 to £4.3bn in 2022 with the Scheme set to be fully funded by 2030.

As a very mature scheme, it has been considering its endgame options. It wants to retain its high-quality service, but is this possible with a declining member and asset base? As a traditional buy-in/buyout option will not work for BTPS, it begs the question- "Is there an alternative?”

This session will address:

• What challenges are BTPS currently facing in its endgame journey?
• A look into membership numbers and assets
• What wider political activity/external factors are affecting schemes?
• What solutions work for BTPS?
• What can we expect to see from BTPS in its journey to endgame?

For many trustees and sponsors, providing member options is a useful tool to accelerate the time to reach buyout. However, these options can change after buyout, so we as an industry must understand the importance of fully communicating with members about their options ahead of buyout, regarding good governance. Some schemes are now developing member journey plans to document member experience alongside funding and investment plans for buyout. However, with endgame fast approaching, what can schemes do for member experience with less time to prepare than expected?

This session will address:

• How can schemes continue to serve members well throughout their endgame journey?
• How can schemes do this in a cost-effective way?
• Should more schemes be considering member journey plans alongside their endgame journey?
• Are Enhanced Transfer Value (ETV) exercises still an appropriate option for members?
• How can schemes continue to use these effectively?

Improved funding levels mean many schemes are looking to de-risk, either in preparation for buyout or to adopt a ‘low dependency’ approach. What investment strategies should schemes consider for this stage of their journey?

This session will cover:

• The different investment philosophies available to trustees
• Whether your interpretation of risk should differ depending on your endgame
• How to retain flexibility should your plans change
• Does ‘investing like an insurer’ help or hinder your journey?
  

Seismic shifts in the UK pensions landscape reinforce the positive role that credit will play in meeting schemes’ endgame outcomes.

This session will discuss:

• The role of cashflow driven investing post the LDI crisis
• Why now is an attractive entry point for credit investors to provide returns, interest rate hedging, liquidity and predictable cashflows
• How credit mandates are evolving - themes and opportunities

The LDI crisis increased demands for instantaneous liquidity. Having built up collateral reserves, Pension Schemes now need to consider the make-up of their collateral – are you making full use of the toolkit available? are you striking the right balance between liquidity, return and resilience?

In this session Rakesh Girdharlal, Head of LDI and Liquidity, will examine how resilience can be achieved whilst building a more efficient collateral pool. 

The last few years has seen the emergence alternative risk transfer solutions all seeking to support DB schemes on their journey to end game.

This session will address: 

• An in-depth explanation on how capital backed journey plans work
• How capital backed journey plans benefit the trustee, members, and sponsor
• An insight into Punter Southall’s capital backed journey plan, the Pension Safeguard Solution, and how it’s flexibility and robust structure opens the bulk annuity market to a wide range of schemes
  

 In 2022, rising interest rates and improved insurer pricing led over 50% of DB pension schemes to now being over 90% funded on an insurance “buy-out” basis. LCP estimates that pension schemes with over £150bn of liabilities are either expected to able to afford full buy-in already or will reach full funding over the next 3 years.

However, many of those pension schemes that are close to being fully funded are in fact not ready to engage in the process of insuring their liabilities.

In his session, Myles will address:

• The key challenges facing DB pension schemes:

            - Getting data and benefit information “insurer ready” sooner than planned

            - Managing illiquid assets that schemes did not plan to hold by the time full buy-in was expected to become affordable

• How pension scheme trustees are addressing these challenges
• What they are doing to preserve the favourable funding positions that they have found themselves in, while they prepare for engagement with the insurance market

It is a common view that buying out a pension scheme's liabilities with an insurance company is the goal many trustees and sponsors aspire to. However, while buyout is an option in some cases, it may not be right for everyone. There are a wide range of alternatives, most of which have not been considered by companies or trustees.

This session will address:

• Why buyout may not be the right answer 
• If not buyout, what else?
• How these alternatives compare, and the relative pros and cons
• Which type of schemes and sponsors they may be appropriate for

On the 16th December 2022, The Pensions Regulator (TPR) published its DB funding code consultation document, and intend to start applying the code from October 2023. Since the first consultation in March 2020, TPR took time to understand and implement concerns from respondents. Schemes are expected to set a long-term objective and a journey plan which will reduce reliance on sponsoring employers, and schemes must improve risk management too. There are concerns from the industry that the draft code shifts the fundamental ways in which strategy negotiations currently operate and extra work will soon be generated. So, how can schemes ensure a smooth transition into endgame whilst remaining compliant with the new DB funding code?

This session will address:

• What will proposals from the draft will mean for the sector?
• How can schemes ensure a smooth transition to their endgames without disrupting well-planned scheme-specific approaches, introducing new hurdles or compliance costs?
• What will the role of TPR be in enforcing the new code?