20-20 Trustees act as Chair to a £60m scheme with an education sector sponsor. Originally, the sponsor had two very small, separate additional schemes with total assets of c£1m. The sponsor was trying to initiate buy-outs for both schemes. Unfortunately, they were not progressing, mainly due to lack of time and experience of the current lay trustees

This case study highlights how we supported the sponsor to find and execute a more efficient solution for the small schemes and how we used our leadership and expertise to agree a much shorter path to buy-out for the larger scheme.



The sponsor had two very small separate schemes with total assets of c£1m and a buy-out deficit of c£0.5m which was material compared to the scheme size.

Both schemes were working towards buy-out and the sponsor had raised two key concerns – the lack of progress being made and the buy-out cost to them. The sponsor was not taking external advice at the time, meaning it was solely reliant on the lay trustees whose intentions were good but whose lack of buy-out experience was slowing things down.

Under 20-20 Trustees leadership, the larger scheme had already agreed a path to buy-out of 10+ years. However, the solvency deficit upon which this path was based seemed high; the advisers couldn’t see past the “house solvency number.” Given our experience in helping schemes of all shapes and sizes reach buy-out, we were keen to really understand the “numbers” and take a closer look at insurer pricing  so we could refine and accelerate a successful path.



1) Scheme merger

With experience in developing solutions for companies that face similar smaller satellite scheme challenges, we knew we could help.

We had already established an effective and positive relationship with the sponsor from our work on the larger scheme, so it was easy for them to make the decision to appoint us as the sole trustee to their two smaller schemes.

Once appointed, we discussed the options we knew were available for the two schemes with the sponsor and made two recommendations. We agreed that a merger with the larger scheme and appointing an adviser to help them weigh up the different options available were likely the best courses of action.

Now things started to move. After taking advice, the sponsor notified the trustees of all three schemes that they intended to merge the two smaller schemes into the larger scheme creating efficiencies in adviser costs, and improving the expected pricing afforded to them in securing their liabilities with an insurer.

After taking their own advice and conducting due diligence, the trustees of all three schemes agreed to the merger. Working in collaboration with the company and advisers, we helped steer actions forward which resulted in the schemes being fully merged within 6 months of the decision.

2) Path to buy out

The larger scheme had a long-term target of buy-out, which was expected to be 10+ years away. Based on our experience, the estimated solvency deficit used to set the long-term target seemed to be overly prudent, resulting in the deficit being higher than we would have expected. We were keen to understand the numbers properly so we could start to refine the journey plan and the conversations with the sponsor about the path to buy-out.

Once we had looked at the larger scheme’s numbers through our lens of experience and insurer-marker knowledge, we determined that there was opportunity to move forward that hadn’t yet been recognised.  We suggested that a change of advisory team, a fresh set of eyes within the same firm, could help progress the journey plan.

The benefits of this fresh perspective could be seen instantly, with collaboration and pro-activeness visible from the new advisory team’s approach to both the journey planning and strategy. Things started to progress more quickly, as the recalculated solvency number proved the scheme was closer than we could have hoped.

The scheme was prudently funded. Provided the recovery plan was maintained, it would provide more cash than was needed to buy-out the scheme. We worked very hard on educating the company about how close we are to buy-out, mapping out the journey and the benefits of maintaining the current cash contributions, which they had already budgeted for.

In the current climate, it would have been tempting for them to reduce their cash contributions, however, based on our guidance, the company agreed to maintain the cash contributions and to target buy-out – resulting in the scheme aiming to be ready to approach the insurance market in around 18 months – much sooner than the 10 years they had originally anticipated.

20-20 Trustees continue to act as sole trustee to the two smaller schemes as we look to complete the wind-up of both.  The larger scheme remains in a strong position to approach the insurance market 18 months from now.  The trustees, sponsor and all advisers continue to work well together, anticipating and working through challenges quickly and efficiently as we keep our eye on the end-goal.

With over 40 years-experience in trusteeship, 20-20 Trustees are an award-winning professional independent trustee organisation, committed to making a difference in the world of pensions. Whatever your trustee requirement, please get in touch today!