Marvin OnumonuIsio has launched a service aimed at trustees and sponsors of defined benefit (DB) pension schemes, giving them more help to choose the right endgame strategy.
The service was designed for schemes that are well-funded and have more options than just going for a buy-out as soon as possible.
Developed over two years with clients, the service uses stochastic modelling to assess different outcomes, rather than the old deterministic approach.
Isio said this makes it easier for schemes of all sizes to get detailed analysis that was previously just available to larger schemes.
The method has already been used by more than 20 clients with assets ranging from £50m to several billion pounds.
The service was used to compare Purposeful Run On (PRO) with buy-out, set rules for surplus release, decide if sponsors should fill a funding gap for insurance, and assess investment choices like target returns and partial buy-ins.
Matt Brown, director at Isio, said: “Whether to run on purposefully or buy-out at the earliest opportunity is the single biggest decision in a DB scheme’s journey. If you think of these as the bookends, there’s a wide range of options in between.
“The risk-reward trade-offs are nuanced and the traditional approach of drawing a few deterministic projections on a page doesn’t cut the mustard.
“The tools that we’ve developed give our clients better insight to make informed decisions.”
Brown added: “We expect this type of analysis will become the gold standard for schemes considering their options under the new regime.”
