Pension schemes trustees urged to establish up-to-date funding positions

Pension trustees should press their advisors for an up-to-date funding position as soon as possible to avoid missing out on buyout opportunities, Cartwright director of consulting, Sam Roberts, has said, noting that 2023 could be a "record year" for the bulk annuity market.

Roberts detailed that, following the liability-driven investment (LDI) crisis, many schemes have found themselves in a much-improved funding position and that schemes who were ready and “in the know” have been able to secure members’ benefits.

However, he warned that some schemes “still remain in the dark” and, as a result, their members may be missing out.

To rectify this, Roberts recommended that those schemes who aren’t currently going through a period of assessment need to “press and challenge” their advisors for current and accurate funding positions.

He also stated that schemes might be “surprised” to learn they are either at, or very close to, buyout and, as a result, they should be “taking firm decisions and acting immediately”.

Roberts additionally commented: “The LDI crisis was quite the storm, but there is a very tangible silver lining which more schemes should be grabbing for the best interests of their scheme and, ultimately, to ensure the security of their members.

“2023 is going to be a record year for the bulk annuity market. What might have seemed unachievable has become an immediately reality for many schemes and we expect the number of transactions to more than double.

“Making your scheme as attractive as possible to the insurers will be crucial in getting the best (or indeed any) deal during what is going to be a busy year for the entire industry. But the starting point has to be established quickly.”

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