Buy-out and Risk Management

 

 Overview

 
We can help you with:
  • identifying the key risks – schemes are typically exposed to risks such as sponsor risk, investment risk, inflation risk and longevity risk.  Understanding the extent of the risk currently being taken in each of these areas is a fundamental first step to determining an appropriate risk budget.

  • managing investment risk – understanding the impact of the pension scheme’s investment strategy on the company’s balance sheet and the cash cost, including the potential use of swaps and other investment products to manage risk and discussing the company’s view on the investment strategy with the trustees.

  • assessing longevity swaps – we have conducted detailed research into this nascent market and developed a market-leading bespoke longevity tool to help sponsors assess the exposure of their schemes to longevity risk and consider the effective price of entering into a longevity cash flow swap or longevity index hedge.

  • analysing and implementing liability reduction exercises – we have long experience of conducting enhanced transfer value exercises, exchange of pension increase exercises and early retirement exercises to generate optimum levels of liability and risk reduction.

  • analysing and executing a buy-out or buy-in – our specialist buy-out team has advised sponsors and managed dozens of pension schemes through a wide variety of buy-in and buy-out processes since 1999, focussing on meeting our clients’ specific needs in a timely and cost-efficient manner.

 

 Insights & views

 
    Corporate Bulletin: Quarter 1 2014
    3 April 2014
    Welcome to this new edition of our quarterly bulletin aimed at defined benefit (DB) sponsors. The recent budget has hit the headlines with some real implications for employers and their pension scheme members. We also talk about the financial conditions at 31 March 2014 and how these might impact pension disclosures at this quarter end alongside market news regarding pension buy-outs and de-risking.
     


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    Corporate Bulletin: Quarter 4 2013
    3 January 2014
     
    Happy New Year and welcome to our latest quarterly corporate bulletin. In this edition we discuss market conditions and accounting assumptions at the end of 2013.
     


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    Pensions Bulletin December 2013
    3 December 2013

    In our latest Pensions Bulletin, we examine two recent consultations from the Department for Work and Pensions which have thrown the spotlight on the gulf between defined benefit and defined contribution schemes and on the possibility of developing alternative ‘defined ambition’ designs to bridge the gap between them.

    The Bulletin also looks at some other recent developments, including new disclosure of information regulations and guidance from the Pensions Regulator on asset-backed contributions.

    We also flag key dates for your diary over the next quarter, including a breakfast briefing on 18 December on the Pensions Regulator’s consultation on a revised code of practice on defined benefit funding.



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    Corporate Bulletin: Quarter 3 2013
    4 October 2013
     
    Welcome to the 30 September 2013 edition of our corporate bulletin. Enclosed is a brief outline of market conditions for those preparing disclosures at this date and some topical news for finance directors.
     


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    Pensions Bulletin September 2013
    9 September 2013

    In our latest Pensions Bulletin, we examine the increased regulatory focus on defined contribution (DC) schemes, with a new code of practice from the Pensions Regulator for trust-based DC schemes, a DWP call for evidence on minimum DC quality standards and a review of scheme charging structures by the Office of Fair Trading.

    The Bulletin also looks at some other recent developments, including a recent European case on the recovery of VAT and the appointment of a new PPF insolvency risk provider.

    In addition, the Pensions Bulletin flags key dates for your diary over the next quarter, including some Punter Southall events.



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    Corporate Bulletin: Quarter 1 2013
    8 April 2013
    In brief:
    • Lower net discount rates at the quarter end mean that pension scheme liabilities could increase by up to 15% compared with the previous year.
    • However, many companies may see net deficits reported on the balance sheet remain broadly unchanged due to good investment performance over the period.
    • The Financial Reporting Council have published FRS102 which will replace FRS17 for accounting periods beginning on or after 1 January 2015.
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    Corporate Bulletin: Quarter 4 2012
    9 January 2013

    In Brief:  

    • Lower net discount rates at the year end mean that pension scheme liabilities could increase by up to 8% compared with the previous year end.
    • Schemes invested in equities and corporate bonds may expect to see accounting deficits broadly unchanged compared to the previous year whereas schemes invested in gilts and index-linked gilts may expect to see increased deficits at the year end.
    • The ONS is due to announce its proposals for possible changes to RPI on 10 January 2013. Until the proposals have been digested, there will remain uncertainty over setting the RPI and CPI inflation assumptions.

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    Reinvigorating Workplace Pensions
    10 December 2012
    On 22 November 2012, the Department for Work and Pensions (DWP) published its long-awaited strategy paper ‘Reinvigorating workplace pensions’ which sets out some possible ideas for so-called ‘defined ambition’ (DA) schemes. It is not a formal consultation; however, the DWP intends to have discussions with industry and consumer bodies to develop possible DA designs. In the short term, the DWP aims to publish, possibly jointly with industry, a framework for DA pensions, although no specific time frame is given.
     


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    Corporate Bulletin: October 2012
    9 October 2012

    In brief

    • Lower net discount rates at the quarter end could increase scheme liabilities by up to 12% compared with the previous year end - with asset returns only just managing to keep pace.

    • The ONS proposals to change the calculation of RPI may create additional uncertainty when setting the RPI and CPI assumptions.

    • The changes to IAS19 from 2013 are set to bring increased pension costs for most companies.

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    Corporate Bulletin: July 2012
    17 July 2012

    In Brief:

    • Lower net discount rates at the quarter end could increase scheme liabilities by up to 15% compared with the previous year end.
    • Many schemes are likely to have experienced investment returns lower than 10% over the year to 30 June 2012. Overall, deficits are expected to have widened.
    • Companies may look to increase the assumed gap between RPI and CPI.

       
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    Incentive exercises: new Code of Good Practice
    20 June 2012
    A new code for defined benefit pension schemes, ‘Incentive Exercises for Pensions: A Code of Good Practice’, has been published in response to calls from the Pensions Minister, Steve Webb, to improve the way pensions-related incentive exercises are conducted.


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    Visit the Industry Insights page for news and views on the latest industry developments
 

 Events

 
    A Streamlined Approach to Investment Decision Making
    3 June 2014
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    Scheme Funding Code of Practice
    18 June 2014
    For Trustees, Finance Directors and those responsible for Pensions and Corporate Risk
    Read more
    Trustee Training - Trustee Knowledge and Understanding (Intensive)
    30 September 2014
    This course addressed the knowledge and understanding requirements
    Read more
    Trustee Training - Trustee Knowledge and Understanding (Intensive)
    4 December 2014
    This course addressed the knowledge and understanding requirements
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    Visit the Events area for all forthcoming Punter Southall seminars, conferences and events
    Speak to us

    Speak direct to our specialists in this area
    Neil Lalley
    Head of Employer Services
    Or call us on
    020 3327 5000