13 Sep 2018

White paper: Maximising value in DB

Value for money is an established concept in DC pensions, and is now gaining momentum in the DB landscape. Hymans Robertson’s analysis shows that by looking across three pillars of value creation, there’s potential to create £275 billion of additional value across UK DB schemes, slashing the collective shortfall by more than half.

Key findings

Running costs across UK DB schemes total £6.5 billion to £8.5 billion per annum compared to a collective shortfall of £500 billion. Although cost savings will help, it won’t make a significant dent if it is the only focus. To secure a better future for DB, broader ways to create value must be considered.
The competitive landscape in the insurance market is creating attractive pricing opportunities, and new consolidation options are emerging. These developments are providing opportunities to improve member security at a lower cost than in the past.
Schemes can bridge the funding gap by adopting an alternative, more capital-efficient investment strategy. This has the potential to increase schemes’ resilience to risk and achieve a stable income more affordably.
Schemes need to consider operational effectiveness. Everything from effective trustee boards to using technology and alternative governance structures.