Run-on is almost as popular as buyout as a defined benefit (DB) endgame strategy, State Street Global Advisors’ (SSGA) survey, in partnership with Van Lanschot Kempen and Clara Pensions, has found.

According to the survey of 100 DB trustees, unveiled at the PLSA Annual Conference, 38 per cent of respondents are looking to target run-on, while 43 per cent are targeting buyout.

In addition to this, 10 per cent of survey respondents chose superfunds as their endgame goal, while 7 per cent selected capital-backed journey plans.

The survey also found that 91 of respondents felt ‘very’ or ‘moderately’ informed about run-on solutions, compared to 89 per cent for buyouts.

Seventy-four per cent considered themselves very or moderately informed about superfunds, while just 55 per cent felt the same about capital backed journey plans.

Speaking at the PLSA Annual Conference, SSGA EMEA head of LDI, Jeremy Rideau, said: “A surprise to me was that almost as many survey respondents believe that run-on is their endgame as those that say buyout. You hear a lot about buyout in the news because it captures the attention of the financial press and run-on doesn’t, but it is as popular.

“Run-on is becoming very popular potentially because some managers and consultancies are showing to trustees that it is a viable solution and can be helpful to members.”

But are run-on and buyouts’ popularity because of their familiarity with trustees, which improves the understanding of the solutions, Rideau asked, highlighting that the survey results showed that run-on and buyout are understood by most recipients of the survey, compared to alternative solutions being less understood.

“So, a lot of work needs to be down for trustees to understand more what these alternative solutions entail to choose these solutions. Both the trustees and the sponsors need to be very well educated to the solutions available to them, if they want to be able to make the best decisions,” he added.

Meanwhile, managing trustee versus sponsor opinions is the biggest challenge when setting a DB endgame strategy, a poll of PLSA Annual Conference attendees found.

This was stated as the biggest challenge by 46 per cent of respondents, while ensuring that member priorities are met, and the understanding the different options, were both considered the biggest challenges by 24 per cent of respondents. Meanwhile, 7 per cent considered it to be market risks.

SSGA’s survey found that both the sponsor and trustee were considered to have equal influence over the DB scheme endgame strategy by 45 per cent of respondents.

However, the trustee was considered to have the most influence by 38 per cent of respondents, and 17 per cent felt it was the sponsor that had the most influence.

Rideau highlighted that its research found that on a buyout basis, around 50 per cent of the responding pension schemes are over 50 per cent funded on a buyout basis, noting that "for many pension schemes, the journey is far from over… so the endgame is something you have to worry and think about, while at the same time, still being a few years away”.

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