Hymans Robertson is warning that schemes are sleep walking into a de facto buy-out because of a lack of endgame strategy. The results of polling at a recent firm webinar on how to avoid this risk, found that the majority of those surveyed (87.8%) do not have a fully planned end game strategy with clear structured timeframes in place, leading to decisions being made almost by default. Further indication for the need for better endgame understanding was highlighted by a second poll which found that only half of those surveyed (56.7%) would buy-out now if they could.

To help Corporates avoid de facto buy-outs taking place, the leading pension and financial services consultancy has launched a new free interactive guide to help increase understanding of the endgame landscape and various options.

Commenting on the tough decisions facing Corporates, Leonard Bowman, Head of Corporate DB Endgame Strategy, Hymans Robertson, says:

“As funding improves for many schemes there is increased urgency on companies to work out their preferred endgame strategy and to engage with their trustees. Many have avoided addressing this issue, due to the perception that any change in decisions would lead to an investment and funding strategy involving higher company contributions. They are also likely to be wary of taking the risk of becoming “locked in” to a strategy that might not make sense in the future if circumstances change. Whether or not a whole scheme buy-in or buy-out is the way to go, should always be a conscious decision, given the scale of the financial implications.

“The many different options could be causing confusion for corporate sponsors and, as a result, they might be unintentionally ‘sleep walking’ down an endgame path. Many companies do not seem to realise they are heading towards a relatively short-term ‘de facto’ buy-out through a single, or series of smaller, buy-ins.

“Our webinar findings highlight the confusion in this space and our recently released guide aims to give companies a better understanding of the issues, to help with decision making, and in particular to establish whether a buy-out should take place as soon as it can or instead schemes should look towards a longer-term run-off strategy.”

Copies of the guide can be found here.