Long term planning

Liability Management

Over the last few years there has been a lot of discussion within the pensions industry (much of it generated by consultants!) about the merits of developing a long term funding and investment strategy (variously described as a roadmap, flight path or journey plan).  The concept is that the company and trustees sign up to a plan to reach full funding over a specified period, usually 15 years or more, with targets and triggers for:

  • funding – typically a buy-out or self-sufficiency measure is used
  • asset allocation – how to de-risk over time, including triggers designed to lock-in the profits from any periods of favourable investment performance
  • liability management exercises – an important component from the company perspective.

In practice developing these plans has been challenging.  Companies have been put off by both the nature of the commitment and the fees and management time needed to explore the concept.  Whilst for some companies there can be a significant advantage in agreeing a long term plan, the decision process needs to be streamlined, simple to work through and cost-effective.  It should be about modelling how to get to the desired destination as painlessly as possible.

At bac we offer a fixed fee solution which combines access to our leading-edge technology with advice from our highly experienced team.  Our mosaic software is designed to walk you through the development of such long term planning.  It puts you firmly in control and, in a simple to use way, enables you to understand the key factors, how they interact and the financial implications of making changes to them.  This allows you to explore the concept of a long term plan, without raising the trustees’ expectations that agreement will be reached.

However, technology is only a component of the solution we offer.  Our team will help you develop your plan and make sure it is practical to implement.  Since we understand the issues which the trustees and their advisers will need to work through, we can help ensure that the design of your proposals avoids any unnecessary hurdles to agreement.