Run-on and DB surplus release
The government’s plan to allow companies to access their defined benefit (DB) pension scheme surplus is supported by The Pensions Regulator (TPR), and could make run-on a more attractive option, allowing sponsors to invest more flexibly into the broader economy and back into their business. There can be benefits for members and sponsors in not rushing to buy-out and continuing to run the scheme on for a period of time.
TPT’s Head of DB Distribution, Jonathan Jackaman, explains the questions that sponsors should ask themselves when weighing up their end-game options, and explains how TPT’s DB Connect could help. We are now actively seeking to speak with interested employers about how TPT's DB solutions can help your DB Scheme become more efficient.
Transcript
With the majority of DB schemes enjoying improved funding levels, sponsors attentions are now focused on what the potential end game looks like.
What's the likely ultimate end game for most schemes will be buyout.
The question sponsors should be asking now is how long the scheme carries on for before the decision to buyout.
Previous thinking was to get to buyout as soon as possible, and that could still be the case for a large number of schemes.
However, there can be benefits for members and sponsors and trustees in not rushing to buyout and continuing to run the scheme on for a period of time.
We work with sponsors and trustees to establish the most appropriate strategy for their particular circumstances.
Whatever the end game plan, it's important that the service providers that you use provide a streamlined service such as DB Connect, so that the scheme is run as effectively and efficiently as it can be from a time, cost, and investment perspective.
If you'd like to know more about how DB Connect could help you with your DB scheme, please get in touch with us.
Rising complexity
Over time, DB schemes have become more complex to run, typically using a number of different advisers, which can result in higher costs to run the scheme and more time spent managing the scheme.
DB Connect, our integrated DB pension scheme service for trustees, where the existing trustee board can stay in place, was introduced to address these issues. Streamlining the services needed to run the Scheme may lead to time and cost efficiencies, and greater accountability (strengthening governance), enabling sponsors and trustees to focus their time on the strategic direction of the scheme.
DB funding improvements
With the majority of DB schemes enjoying improved funding levels, sponsors’ attentions are now likely to be focused on what the potential end game looks like. Whilst the likely ultimate end game for most schemes will be buy-out, the question sponsors should be asking is how long the scheme carries on for before the decision to buy-out, and how much risk they want in their investment strategy.
We work with sponsors and trustees to establish the most appropriate funding and investment strategy based on their desired end game.
Transcript
Whilst the funding positions of most DB schemes are now improved, the complexities in running schemes remains for many.
Time spent managing a number of different advisors hasn't decreased, but costs continue to escalate.
Now could be the time to take advantage of the improved funding position and look at how the scheme is run to make sure it is being run as efficiently and effectively as possible.
DB Connect, our integrated DB pension scheme service was introduced to address these challenges through streamlining the running of the scheme, which may lead to time and cost efficiencies, allowing sponsors and trustees to concentrate
on the strategic direction of the scheme.
If you'd like to know more about how DB Connect could help you with your DB scheme, please get in touch with us.
Streamlined services
TPT offers a genuine consolidation option for sponsors and trustees through both our DB Master Trust and DB multi-trust solutions, which provide administration, actuarial, fiduciary management, and covenant services. It aims to improve efficiency, increase accountability and reduce costs. TPT also offers standalone fiduciary management services - if you'd like to find out more, click here.
Our solutions have a flexible governance structure whereby you can retain the existing board, appoint a new trustee, or use our trustee depending on your needs, allowing you to choose the most appropriate model for your circumstances.
Retaining the existing trustee
DB Connect was introduced as a result of identifying the need for a consolidation solution for schemes where the trustee(s) want to remain in place.
Through integrating the service proposition there is a smoother data flow between administration, actuarial and investment functions which ultimately leads to time saved and lower running costs.
If you are a professional trustee and would like to find out how we could work together, please click here.
Transcript
DB Connect is our integrated multi-trust solution that we've introduced to the market.
At its core is actuarial, administration and fiduciary management, and we believe that it compliments pension schemes where the existing trustee board remains in place.
Now, some of the benefits that we see include time efficiencies, cost efficiencies, and also greater accountability for single service providers.
DB Master Trust
DB Complete is our master trust solution, which includes all of the services of DB Connect, and also provides a governance solution through the additional legal and trusteeship services.
DB Complete is designed to offer a complete defined benefit scheme consolidation solution, providing additional economies of scale and a governance solution while retaining the unique elements of each participating scheme.
Upcoming DB webinars
If your DB scheme’s funding has improved over the last couple of years, there are a number of different options now available to you.
If you want to understand what these options are and how they could be relevant for you and your scheme, along with the potential benefits for the company and the scheme’s members, we are hosting a series of webinars that could help you.
FAQs
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What is DB Consolidation?
DB pension scheme consolidation refers to the process of combining multiple defined benefit pension schemes into a single, more efficient structure.
This approach aims to streamline administration, reduce costs, and improve governance by leveraging economies of scale.
It provides benefits like simplified management, access to better investment opportunities, and enhanced administrative support, ultimately aiming to deliver a more sustainable and robust pension solution for the sponsoring employer, members and trustees.
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Is consolidating my DB scheme a good option?
Demand for consolidation is increasing as sponsors and trustees look for efficiencies through scale and seek access to best-in-class pension scheme investment management capability.
Consolidation provides better value for the schemes, incorporates the highest levels of stewardship and, ultimately, delivers better outcomes for members.
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What’s the difference between DB Connect and DB Complete?
DB Complete is a DB Master Trust. In order to join the Master Trust, a new section is created within the Master Trust with members being transferred without consent into the new scheme. The rules of the previous scheme are mirrored in the Master Trust.
DB Connect is a service proposition, which does not require the existing scheme to transfer into the Master Trust. Instead, TPT provides an integrated service to the existing pension scheme. As there is no change to the legal structure of the scheme, members do not need to be transferred into a new scheme, which simplifies the transition and communication process.
The key ongoing difference between TPT’s DB Connect and the DB Master Trust is the structure of the governance model. Under DB Complete, governance is the responsibility of the Trustee of the DB Master Trust. Under DB Connect the Company can retain the current scheme structure and existing trustee board.
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How does joining TPT’s DB Connect work?
The company will benefit from one of our experienced transition project team who will lead the implementation process through all aspects of planning and delivery, taking on the vast majority of the tasks associated with the implementation.
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What is a DB pension?
A DB pension, or defined benefit pension, is a retirement plan where an employer provides a guaranteed income to the retiree, based on factors such as salary and years of service.
Unlike other types of pensions, the defined benefit pension pays a predictable and steady income for life, ensuring financial security. At retirement, employees may also have the option to take a lump sum amount in addition to their guaranteed income, providing flexibility in managing their retirement funds.
Our awards
Some of our customers
TPT manages 69 schemes, for over 2,400 employers, with 470,000 members (as at 30 September 2024).
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