LGIM is one of the largest pension fund managers in the UK1, supporting DB pension schemes on their journey towards endgame. We understand how important it is to strike the right balance between short and long-term objectives. And we work closely with our clients to manage the necessary risks as they strive to pay members’ pensions, maintain funding levels, and construct the way forward to their preferred endgame destination.
Meeting the challenges for UK DB pension schemes
The DB pensions landscape is changing. In recent years, significant moves higher in interest rates have led to dramatically improved scheme funding levels. These shifting tectonic plates of markets and funding positions have resulted in a similarly seismic shift in DB scheme strategy, with endgame solutions now front and centre of scheme agendas. Schemes are also increasingly seeking to incorporate responsible investment considerations.
We are seeing three preferred endgame choices emerging from conversations with our DB clients:
Buyout
First, there are schemes wishing to ‘lock in’ the strong funding positions they currently have, with the focus on progressing towards buyout as soon as possible
Run-on
At the opposite end of the spectrum, a number of trustees are clear that they want to ‘run on’ their scheme in perpetuity
Both
There is also third and significant group of well-funded schemes that are keen to run on for now, while keeping buyout in mind over on a longer-term horizon
Bridging the gap to your endgame
At LGIM, we combine our extensive asset management and insurance expertise to manage each scheme’s journey to endgame, using the strategies most appropriate to their particular circumstances. Whether your scheme is focused on buyout, run-on or both, Legal & General is here to help you construct the way forward by sharing our investment and insurance expertise in DB endgame solutions.
You choose the endgame, we’ll build the bridge
Buyout, run-on or both? Whatever your scheme’s preferred destination, we’ll help you construct the way forward.
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Key risks
The value of any investment and any income taken from it is not guaranteed and can go down as well as up, and investors may get back less than the amount originally invested. The risks associated with each fund or investment strategy should be read and understood before making any investment decisions. Further information on the risks of investing is available from LGIM’s Fund Centres.
While LGIM has integrated Environmental, Social, and Governance (ESG) considerations into its investment decision-making and stewardship practices, this does not guarantee the achievement of responsible investing goals within funds that do not include specific ESG goals within their objectives.
Awards should not be considered a recommendation. Past performance is not a guide to the future.
1. Source: IPE Research 2022, by AUM