Liability management through member options
Liability management exercises can be an effective tool to help pension scheme sponsors and trustees reduce the risk in their schemes as well as offering members more choice and flexibility. Possible liability management exercises include:
Enhanced Transfer Values involve incentivising deferred pension scheme members to transfer their benefits to another pension arrangement. A Retirement Transfer Option involves actively engaging with members to help them understand the option they have to transfer to a Defined Contribution arrangement at retirement and the flexibility that provides. Please look at our brochure to learn more about these solutions.
There are other possible liability management options available such as running bulk early retirement or trivial commutation exercises. Companies and Trustees may wish to consider just one of these options or a combination and also incorporate them into a wider de-risking programme.
Provided such options are communicated clearly and fairly, and members are supported so they can make informed decisions which suit their particular circumstances, then the result can be a ‘win’ for all concerned.
How can Towers Watson help?
Towers Watson has considerable experience in providing complete solutions covering all aspects of liability management exercises. We believe Towers Watson is uniquely placed to work with you in achieving your objectives for the scheme.
- Unrivalled expertise
Our Implemented Settlement Solutions team, in conjunction with local market practitioners, can offer unrivalled expertise in designing and implementing liability management exercises across a range of schemes, from the biggest to the smallest.
- Market-leading approach
We have a market-leading approach to risk management and have been a pioneer of well-run, best practice exercises that mitigate reputational risks for our clients.
- Best practice
Recognising lessons learned and best practice from other jurisdictions, we have developed a set of guiding principles for Irish exercises. In the UK, Towers Watson provided direct input into the development of the industry Code of Good Practice and fully supports the principles it sets out. Our UK colleagues also have direct input into the Incentive Exercise Forum, the UK industry working group established to monitor these exercises and promote best practice.
- Tailored solutions
Most importantly, we are willing to work with you to design and implement the exercise that is right for the company, the trustees and the scheme’s membership.
- Project management
Our approach focuses on effective project management to provide a framework for efficiently run exercises and on-time delivery. On smaller projects, we would expect project management to be provided by the local consulting team in conjunction with you. On larger scale exercises, we can call on accredited PRINCE2 project managers who have extensive experience in delivering complex projects of this nature, and many of whom also hold pensions industry professional qualifications.
By combining experienced pensions professionals with wider project management capability, we are able to communicate with clients using a common language and set of tools. We have a track record of delivering on time and within budget.
Most importantly, we are willing to work with you to design and implement the exercise which is right for the company, the trustees and the scheme’s membership.