DB Run-on: Cost-saving solution for DB pension schemes

Achieve significant cost savings and maximise value for your defined benefit pension scheme through efficient running-on

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What is our run-on solution?

DB Run-on is our solution for Defined Benefit (DB) pension schemes, most suitable for schemes from £100m upwards and particularly attractive for those over £300m.

DB pension schemes have long been viewed as a burden for businesses, with persistent funding deficits. Many sponsors, tired of constant financial demands, are now considering insurance market buyouts.

Our solution for DB pension schemes

While the funding regime has pushed schemes towards buyout and wind-up, an alternative exists. DB Run-on offers a novel approach for medium to large DB schemes, allowing you to run-on your pension scheme with confidence for the mutual benefit of both scheme sponsors and members. 

Key benefits

  • Avoid value-transfer from a high insurance price
  • Access surpluses efficiently - both those present now and those that emerge in future
  • Retain a degree of influence over how the scheme is run
  • Maintain flexibility to benefit from future member option exercises
  • Do the right thing by your current and former employees
  • Avoid immediate negative accounting impact from insurance buy-out
  • Enhance your corporate valuation over time 
  • Potential to share in surplus through regular benefit improvements
  • Maintain a high level of benefit security, comparable to insurance buy-out
  • No loss of flexibility in at-retirement options, for schemes with defined contribution (DC) sections and money-purchase Additional Voluntary Contributions (AVC)
  • No requirement to change administrator, a process which can present risks and a deterioration in member experience
  • Terms of many member options like cash commutation and Cash Equivalent Transfer Values (CETV) may continue to be better than an insurer might provide 

Is this right for my scheme?

Is your pension scheme over £100m? If so, run-on could be a substantially better option for you than immediate buyout.  

The next step is likely to be a feasibility study – this examines the business case in more detail, considering your and your scheme's specific circumstances. 

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For many schemes, the value opportunity is huge. For a £200m scheme that is currently full-funded on buy-out, the value of the surplus that can potentially be extracted over time is likely to be more than £20m after costs. For a £1bn scheme, it could be over £100m.
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Ian Mills, Head of DB Endgame Strategy
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At Howden, we help create pension strategies tailored to your needs and member outcomes.

With experience, market scale and data-led insight at our core, we help ensure our retirement solutions are right for you.

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