Marvin OnumonuHymans Robertson has urged defined benefit (DB) pension schemes to take advantage of improved funding positions and consider taking a purposeful pause before making decisions on their endgame options.
In its latest paper, Excellence in Endgames: The value of taking a purposeful pause, the consultancy said 85% of UK DB schemes were now fully funded on a technical provisions basis, with over half estimated to be able to afford full insurance.
Many schemes are ahead of expectations, but Hymans Robertson warned there is a risk of rushing into decisions.
Laura McLaren (pictured), head of DB scheme actuary services at Hymans Robertson, said: “DB pension scheme funding has improved faster than anticipated, and that’s opening new strategic choices.
“Moving too quickly could mean missing out. A purposeful pause isn’t about delaying the progress but is about making sure schemes are heading in the right direction.
“Making informed decisions, avoiding unintended consequences and delivering the best outcomes for members and employers.”
McLaren added: “We’re seeing a growing number of schemes take a step back to reassess their long-term goals, especially as the market continues to evolve.
“The options available today are broader and more flexible than ever before.
“Whether it’s exploring run-on strategies, navigating illiquid assets, or preparing data for a future transaction, a purposeful pause gives schemes breathing space to get it right.”
She said: “It’s a chance to align stakeholders, clarify objectives, and ensure the scheme is operationally ready.
“All of these factors are critical to a successful endgame. Whether choosing insurance or run-on, with the right preparation, schemes can not only secure member benefits but also unlock additional value for sponsors.
“Ultimately, it’s about making confident, well-considered choices that reflect the unique circumstances of each scheme.”
She said: “A pause offers schemes the chance to take stock of recent market and regulatory changes, including the proposed surplus reforms.
“It’s important for them to consider how these developments might reshape their strategic options.
“A pause also provides schemes with space to align trustee and sponsor views, ensuring a shared vision and avoiding obstacles further down the line.”
She added: “With the endgame landscape expanding to include run-on strategies, superfunds, and other solutions, taking time to explore this growing range of options in depth should avoid locking into decisions prematurely.
“Operational readiness is another benefit. Schemes can use the time to improve data quality, resolve benefit discrepancies, and prepare insurer-ready specifications whilst keeping options open.
“All of these elements ultimately support smoother transactions and better pricing.”
She said: “For those with illiquid assets, a pause can also help manage exposures and help avoid penalties by allowing time for assets to run off or be disposed of strategically.
“Finally, taking time can help preserve valuable member flexibility and discretionary powers that may not be available post-transaction, helping to avoid any future dissatisfaction.”
