How to run on | Insight Investment

As the landscape for UK defined benefit (DB) pension schemes continues to evolve, trustees and sponsors face an array of strategic choices amid regulatory change and economic uncertainty. We share our current thinking on how DB schemes can run on for the longer term.

Key takeaways

• Running on your DB pension scheme can retain flexibility and keep your strategic options open, until legislation and regulatory expectations become clearer. Exciting innovation is emerging, as demonstrated by the Stagecoach/Aberdeen transaction.
• DB schemes looking to run on will typically want to ensure they have liquidity to cover their cashflow obligations, hedge their liability risks, and grow any surplus assets.
• A core allocation to contractual assets, such as high-quality corporate bonds, complemented by a hedging overlay, can establish a more resilient foundation on which schemes may then pursue surplus growth while aiming to reduce risk to members' retirement income.

Read our paper A new world for UK DB schemes to find out more, along with other key trends for pension professionals to consider.