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Pension Safeguard logo
Pension Safeguard logo

SmarterPension Security

The Pension Safeguard Solution (PSS) is an innovative alternative de-risking solution for UK defined benefit pension schemes, aiming to radically reduce the risk of members not receiving their benefits in full.

In tandem, PSS seeks to reduce the risk that the employer is ever called upon again to contribute to the scheme.

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Delivering a more certain outcome

A large proportion of defined benefit pension schemes are still a distance away from being able to afford a buy-out or be able to have a low level of dependency on the employer and be invested with a high resilience to risk.

There are many uncertainties ahead. Whether it’s the strength of the sponsor or the level of investment returns, there is little which is guaranteed. Trustees have limited ability to accelerate the path to their end game. The Pension Safeguard Solution aims to reduce the impact of the downside risks for the trustees and smooths the path to a full buy-out of all benefits.

Targeting an Underserved Market

Many DB schemes are still a distance away from the finish line. The PPF’s Purple Book 2022 reported that 40% of DB schemes were under 75% funded on a buy-out basis. Funding levels have improved for many schemes since then, but a sizeable portion of the market will still be reliant on their sponsor for an extended period of time, potentially leaving members’ benefits at risk.

These schemes have had limited options, to support them in achieving their end game, beyond the traditional services offered.

PSS Proposal

The PSS offers a practical solution by enhancing the existing strategy, aiming to deliver:

  • An immediate and material improvement in the security of pension members’ benefits
  • A cost-efficient way to reduce the schemes' reliance on the corporate sponsors and increase the certainty of the path to full insurance buy-out
  • An alternative risk transfer solution that maintains the link to corporate sponsor and keeps in place current governance structure

A protective wrapper for the scheme

The PSS places a very substantial capital buffer between the scheme and the employer, which is intended to absorb adverse deviation in the scheme’s funding position through time.

Providing the benefit of continuity, the scheme’s governance structure does not change. Its existing advisors, the trustees, and the link to the employer are maintained. The capital buffer and the scheme’s assets are invested in a 30:70 matching / growth investment strategy focused on liability driven investing and incorporating private market opportunities.

The Pension Safeguard Solution targets a buy-out of all members’ benefits in full, typically, in around 15 years and is expected to be substantially cheaper than an immediate buy-out.

Benefits

PSS seeks to deliver the following benefits:

  • Members

    Increased certainty of receiving their benefits in full

  • Employer

    Protected against calls for further cash contributions; longevity, falling interest rate and rising inflation risks; poor investment returns

  • Trustee

    Almost entirely removing covenant risk

About Us

The Pension Safeguard Solution is a joint venture between Punter Southall and Carlyle, bringing together their respective expertise in pension and investments, to deliver an innovative de-risking solution for the UK defined benefit pension market

In-depth pension knowledge

Seasoned industry leader with deep expertise in the UK pension & risk transfer markets

Differentiated network

Established industry reputation and credibility with leading schemes & trustees

Risk management

Strong risk management & actuarial expertise

Global investment platform

$369bn assets under management, with extensive product & sector specific investment expertise to identify deployment opportunities

Differentiated underwriting

Established origination & underwriting capabilities, refined over three decades

Asset management expertise

Global investment capabilities to drive returns and offer leading asset management expertise

Get in touch

If you would like to learn more about the Pension Safeguard Solution, please do get in touch.

Katherine.lynas@puntersouthall.com