Managing a pension scheme’s liabilities is almost as important as managing a pension scheme’s assets. Since 2015, and the introduction of pension flexibility in the UK, many pension schemes have carried out exercises where members have been given the ability to take their benefits in different ways, either within the scheme or outside the scheme. However, a number of these exercises were carried out on a one-off basis, and are usually driven by the sponsor in a way to reduce the funding obligation for itself.
Providing members with choice about how they take their benefits means they have the ability to choose what is best for them, and if these additional options are reducing the ultimate cost of a pension scheme’s end-game, the sponsor can also benefit. Providing members with options outside of the scheme can also provide a more cost-effective way of settling pension liabilities rather than having to insure the benefits with an insurance company (with the hefty premium that accompanies this type of insurance).
20-20 Trustees have significant experience in developing and implementing these additional options for members of pension schemes. We also understand the financial adviser market and their ability to support members of both small and large pension schemes. 20-20 Trustees believe that effective communication and education enables members to make the right choice for them, and we have a depth of experience of translating complex financial decisions into simple and practical actions for members.
In the UK environment, providing members with additional options along with education and subsidised guidance enables them to make decisions and use their retirement wealth in a way that suits their personal needs. Whether or not members are offered additional options depends on the circumstances of the scheme and the terms that can be offered.