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    • Managing closed schemes
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Managing closed schemes

Closing defined benefit (DB) schemes to future accrual is becoming more commonplace among the UK’s occupational pension schemes. Taking this route obviously reduces costs and uncertainty for employers, but it is not an easy decision and involves considerable complexity.

Once the DB scheme has been closed, sponsors need to remain engaged with the current and past members and trustees to ensure good relations exist when negotiations on funding and contributions occur. Employers also need to consider whether they might accelerate an eventual exit from the scheme either through annuities or encouraging the take-up of early retirement and transfers out. Finally, sponsors need to continue to monitor and discuss the scheme’s investment strategy with the trustees, and appreciate mismatching risks.

Punter Southall’s Employer Consulting team has dedicated experts able to assist with all the complex elements of managing a closed scheme including:

• Maintaining a good working dialogue with trustees
• Protecting the employer from unnecessary calls for cash contributions
• Producing communication material for scheme members and employees
• Analysing potential risk reduction achieved versus cost to help ensure the most cost-effective and efficient exit from the scheme. More information about our approach to managing liability risk can be found here.
• Expert analysis of the annuity buy-out market
• Assistance with preparation for buy-out including price analysis and negotiation with insurers, and views on potential timing
• Examinations of longevity risk and whether mitigation through swaps is suitable for the scheme
• Assistance with data cleansing and record-keeping
• Support and advice during changes to investment strategy. Go to our Investment consulting page
• Devising an overall plan to put the employer on a clear path to eventual exit.

The following case study details how we successfully negotiated a buy-out deal for one of our clients.

For further information contact Danny Vassiliades by email or on 020 7839 8600.