Important for schemes to ‘tackle the tough questions’ when deciding their endgame strategy – LCP

In a talk at their annual DB pensions conference, LCP experts explained that in determining appropriate endgame strategies, sponsors and trustees must embrace questions around trustee fiduciary duties and member perspectives, as well as fully balance the risks of what could go wrong against the potential rewards of any particular strategy.

LCP’s Michelle Wright, Myles Pink, and Jonathan Griffith participated in a panel session called ‘Forging gold standard endgame strategies—tackling the tough questions' at LCP’s annual DB Conference last week.

LCP experts explained that while this topic could, at times, appear polarised and bring contrasting views, it was important for all stakeholders to grasp the nettle and proactively decide on an endgame strategy rather than sleepwalk into one.

As part of this, the panel highlighted possible misconceptions about Trustees’ duties and how stakeholders may look differently at the risks and opportunities of each endgame option and what might go wrong. This includes potential areas of regret risk and how any decision may look with the benefit of hindsight.

LCP experts reminded the audience that members must be at the heart of trustees’ and sponsors’ decisions about scheme endgame solutions. The panel discussed the importance of ensuring that endgame decisions are approached and communicated in a way that members can trust and support.

The discussion wrapped up with remarks stating that there is no single one-size-fits-all solution to endgame strategy, as it will depend on the particular circumstances of the scheme and sponsor. However, all schemes will need to proactively engage with this topic to deliver the best possible outcomes for all stakeholders.

Michelle Wright, Partner and Head of Pensions Strategy at LCP commented:

“At times, endgame strategy can seem like a polarising topic, but it was clear from the panel discussion that it doesn’t need to be. The choice of running on forever or fully insuring immediately is simply bookends to a whole spectrum of potential options available to pension schemes - a key decision is working out where on that spectrum you wish to sit.”

Jonathan Griffith, Partner and  Head of Endgame Innovation at LCP, added,

“It is crucial for trustees and sponsors to carefully consider all the tough questions.This means all schemes, irrespective of size, need to consider their objectives and risk appetite —what they aim to achieve, why these goals matter, how they’ll reach them, and identify key milestones along the way.

Ultimately, the endgame isn’t just a finish line; it’s a strategic journey.”