Your wind-up journey: a guide to getting it right

With many more schemes being in a position to look at buying out their pension scheme liabilities, trustees are now starting to think past the transaction date. 

How can they ensure that the correct members have the correct benefits? How can they effectively wind-up their scheme to make sure that they and their sponsoring employer have securely offloaded their future risk? 

Getting it right

For many trustees and employers, winding up a pension scheme is something they will only do once, so they need to make sure they get it right. 

Winding up a scheme can be a long and complicated process, presenting challenges never seen before. Trustees and employers need to be confident that: 

• the members’ benefits are correct;
• they are secure; and 
• any remaining surplus has been fairly dealt with. 

Trustees need to know that the wind-up has been effective and there’s no further risk on their heads. Employers want to be confident that their duty is complete, and that any surplus that can be returned to them is done in an efficient way.

So how do you go about doing this? Our focus is on four main areas.

Strategic oversight from specialists

To avoid the potential pitfalls, we assign all of our clients a specialist from our Post-Transaction team. They will:

• Provide strategic oversight into schemes’ buy-in to wind-up journeys, ensuring that we minimise the risk of the project being delayed, or unresolved issues returning after wind-up. 
• Make sure that the project is done right first time, important steps aren’t missed, and it’s progressed at a good pace.  
• Work alongside our risk transfer colleagues even before the transaction is signed to ensure potential post-transaction issues are identified as soon as possible and planned for accordingly.

At BW, we have wound up over 250 schemes, demonstrating our wealth of expertise in this area. Our post-transaction team has 15 consultants and are currently supporting over 80 cases – experience that helps our clients get to wind-up with confidence. 

Know your insurer

Every insurer is different, with different processes and expectations. This is why we take specialism one step further, assigning our clients dedicated post-transaction consultants with in-depth experience of their insurer.

Our Insurer Research team are in regular communication with each insurer, liaising with them on the latest developments and any issues with clients. This process helps us develop not only up-to-date knowledge of each insurer’s processes, but also an efficient and trusted relationship which allows us to get better outcomes for our clients.

Streamline your data projects

Data projects and Guaranteed Minimum Pension (GMP) projects in particular are one of the main reasons why the buy-in to buyout process can be delayed. They are also a significant amount of risk in projects – changing member benefits is fraught with danger and can result in mistakes and unhappy members.

To combat this, we have a dedicated Transaction Data Readiness team responsible for our data projects. This team has supported schemes for over 20 years, working with both our administration clients and on standalone projects, covering very small schemes to ones with over 75,000 members. The team also supports the Pension Protection Fund (PPF) on some of its largest and most complex cases.

Take your members with you 

Ultimately the key people we need to consider in the buy-in to buyout phase are the members. Their relationship with their pension is changing, and that might be unsettling for them.  

Make sure they understand what is happening to their pension and that they look on the transaction positively. It’s very important that during the transition they don’t see a loss in service in the administration of their pension.

We help our clients build a process aligned with their members’ priorities that ensures a seamless transition through buy-in and buyout to minimise member disruption. Our award-winning communications team, DrumRoll, are also on hand to help schemes wanting to have a more tailored approach to their communication strategy.

Want to know more?

Look out for future blogs and case studies on our exciting post-transaction work or give us a call to talk through your scheme.