Consultancy Services

Lets Talk Buyout post 2014 Budget - July 2014

Lets Talk Buyout post 2014 Budget -  July 2014

Buyout Market Watch - March 2013

An Update Buyout Market Watch Report From JLT Pension Capital Strategies as at 31 December 2012


Tiziana Perrella FIA Tiziana Perrella FIA
Martyn Phillips FIA Martyn Phillips FIA

Buy Out

In recent years, changes in regulations and accounting standards have meant that running a defined benefit arrangement has become significantly more onerous.

Current funding regulations tip the balance in favour of the trustees when it comes to the level of contributions the employer should pay. Stricter accounting standards require pension costs to be reported in a realistic way consistent from year to year, with very little scope for smoothing. Solvent companies have not been able to exit a pension scheme without funding the scheme to the full buyout level. Further improvements in longevity, continuing market volatility and an increased emphasis on governance and regular disclosures are likely to make defined benefits provision more expensive than ever.

Managing the risks associated with a final salary scheme may be one of the biggest challenges that a FD has to face. Whilst it is true that the "nuclear" solution of full buyout may not be suitable for everybody, it is also true that the range of opportunities available is sufficiently vast (and in many cases, inexpensive) to suit most circumstances - not investigating further may be very hard to justify.

The increase in the level of sophistication within the de-risking market has meant that consulting in the de-risking and buyout areas is now a highly skilled job. Even in the context of a straightforward bulk buyout exercise, increased competitiveness means that specific skills are required to review prices available from the whole market, ensuring that there is an auditable, compliant process in place to see the exercise through.

We have developed extensive consulting experience in the fields of both de-risking and buying out liabilities. We have designed a programme that identifies five key steps and considerations we believe are crucial to a successful and efficient de-risking process.


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