Isio has launched a service to help trustees and sponsors of defined benefit (DB) pension schemes to choose the right endgame strategy for their scheme.

Launched in response to schemes needing to proactively consider all endgame options, and the new reality that for some well-funded schemes, buyout at the earliest opportunity will not be the best approach, the new service is set to provide a greater level of insight to quantitatively assess the range of options.

Announcing the launch, Isio noted that many DB schemes have historically grappled with overwhelming deficits and have seen buyout as their only option when they were able to afford it.

However, it argued that well-funded schemes now have a wider range of options available to them, including purposeful run on (PRO), but that traditional deterministic modelling approaches lack the sophistication required to make an informed decision.

Given this, the service aims to adapt methods typically only available to larger schemes and make it available at an accessible cost for most schemes, applying stochastic modelling techniques to evaluate target outcomes in a more sophisticated way.

The service has already been used successfully by over 20 clients ranging in size from assets of just £50m to several £bn.

Commenting on the launch, Isio director, Matt Brown,said: “Whether to run on purposefully or buyout 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.

"We expect this type of analysis will become the gold standard for schemes considering their options under the new regime.”

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