As your scheme matures, your attention will change towards a focus on ‘end-game’ and what this means for your journey plan. Whether your scheme is aiming to secure benefits with an insurer, or to transition towards a carefully managed run-off, you will benefit from planning ahead.
You’ll need to consider;
Your present funding position
Required return targets
Future cashflow requirements
The continuing reliance that you can place upon your sponsor
Setting your long-term objectives is key.
So too is monitoring your progress. Because the future is uncertain, your investment strategy may also need to be adaptable to changing circumstances.
No two schemes are the same. No two journey plans will follow the same path. We will provide you with advice at the right time specifically tailored to your scheme’s requirements.
We can help you stay on track by monitoring how your funding position compares to different end-game options. We can help you with the important choices that you face as you hone in upon your objectives.
But knowing your choices and monitoring your progress will only take you so far. You’ll also need to have the right investment solution. We don’t believe in a ‘on-size-fits-all’ buy-out portfolio. Each insurer will have different preferences depending upon their circumstances and market conditions. Achieving the most cost-effective buy-out often requires a careful matching of your investment portfolio to those preferences.
Being adaptive to changing circumstances
Your scheme is unique, we recognise that. We also recognise that the future is uncertain and, your circumstances could change. Even the most well thought-out journey plan is likely to be disrupted by a sponsor in financial difficulties seeking to reduce their deficit repair contributions.
If you are placing a great deal of reliance upon your sponsor’s continued financial strength then this will need to be factored into your plans.
When circumstances change, you’ll need course corrections to keep you on track. Whether those course corrections are caused by abrupt changes or are just the necessary fine-tuning that you will need as you hone in on ‘end-game’, you’ll save costs and improve certainty when your investment solution is adaptive.
We’ll set investment strategy and manage your investments in-house. Your liability hedging, your cashflow matching and your growth portfolios are all managed ‘under-one-roof’ – that makes your investment solution efficient, nimble and, importantly, adaptive.
The required return on your growth assets will fall as you near ‘end-game’. Your investment solution will begin to centre upon liability hedging and cashflow matching. Having these two portfolio building blocks managed holistically will enable you to maintain better hedging precision and help you ‘lock-in’ to insurers’ buy-out pricing.
Buy-out preparation: 3 practical considerations
As a scheme that is targeting a buy-out matures, trustees will need to consider how their investment strategy should be best prepared. The right investment strategy will help achieve a smooth buy-out transaction.
But there are some less than obvious aspects of achieving the necessary improvements.