Shifting GEARS: key stages to success
Welcome to our hub for strategic journey planning – containing all the resources you need in one place to design, implement and evolve your plan centred around our LCP GEARS framework.
A successful journey involves being able to both manage risks effectively and capitalise on opportunities. So what does this mean in practice?
The events of the last two years have shown that it's more important than ever before to have a robust plan for your pension scheme that can adapt to change. In addition to short-term actions, it's important to take a step back and focus on the bigger-picture plan.
The requirements in the Pension Schemes Act 2021 and those in the anticipated new funding regime are just two of the reasons why more and more schemes are working to agree longer term strategic objectives, and designing a plan to reach them.
To us, strategic journey planning means working collaboratively to help our trustee and sponsor clients actually meet their long-term scheme objectives, not just talk about them, whether those objectives are buy-out, buy-in, consolidation or long term run-off.
At LCP, we are able to bring together expertise across the full suite of journey-planning advice, including covenant, funding, investment, longevity de-risking, member options, consolidation and governance. We use our LCP GEARS framework to drive forward each step of the journey and make sure our clients receive a truly integrated and joined-up approach.
Strategic journey planning framework
Below you can learn about our strategic journey planning framework and access our key thought leadership in this area. The rest of this hub is divided into sections covering each stage of our framework.
LCP GEARS is the robust framework covering the first five steps, helping you turn journey planning discussions into actions and shift through the gears to achieve your objectives. The last two steps are optional, for those schemes wishing to buy-out and wind-up their scheme.
G - Get the right governance structure in place
E - Establish your endgame and timescales
A - Analyse what could change your journey
R - Refine the steps you plan to take to reach your goals
S - Steer your journey dynamically and in a joined-up way
If your objective involves insurance or another third-party solution
- Transact successfully at the right time
If you subsequently decide to wind-up
- Complete wind-up efficiently
Key overview content
GET
Get the right governance structure in place. Planning and managing a strategic journey plan will require trustees and sponsors to make important decisions, sometimes in a short space of time. That’s why our framework starts with putting in place a collaborative framework that supports timely decision making and makes best use of advisers.
ESTABLISH
Establish your ultimate objective and timescales. You should consider the full range of options and realistic timescales – the relative cost of different long-term options isn’t static over time, and your constraints and priorities might have changed. Remember all decisions should be framed in the context of covenant; not just current levels of cash requirements and investment risk, but how this support might change over time, and for how long you can rely on the sponsor.
ANALYSE
Analyse what could change your journey. Investigate your exposure to key risks and opportunities, including climate change. It’s important to understand how these interact with each other and the sponsor covenant, in the short and long term. In practice this and the previous step may become iterative, as your understanding of risks could influence where you try to realistically get to.
REFINE
Refine the steps you plan to take to reach your goals. Set your investment and hedging strategy to match your target. Understand how member experience could affect the journey and plan data activity around your strategic priorities.
STEER
Steer your journey dynamically and in a joined-up way. Of course things never go exactly according to plan – so you will need to monitor progress and opportunities in real time, pre-agree how you will react to change and evolve your plan accordingly.
TRANSACT
Transact successfully at the right time. For those whose objective involves insurance or another third-party solution, our advice is to approach the market in a smart way, to maximise engagement for your transaction and ensure you get the pricing and terms you need. Find out how in our insights below.
COMPLETE
Complete wind-up efficiently. For those who subsequently decide to wind-up their scheme, we can help you to efficiently complete the required steps and ensure the right protections for members, trustees and the sponsor.
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