XPS Group has launched a solution to help defined benefit (DB) scheme trustees and sponsors run-on their schemes.
The consultancy said its solution – XPS Integrated Run-On – is designed to help DB schemes take a robust approach to running on their schemes amid a "significant" shift in more schemes exploring run-on, either as a temporary solution on the road to buyout or as part of a long-term strategy.
XPS noted recent research it conducted showed UK DB schemes could generate up to £170bn of surplus over the course of the next decade, measured as funding above 100% on a buyout basis. It also stated just over two-fifths (41%) of medium to large schemes are exploring run-on as part of their endgame strategy.
XPS said the Pension Schemes Act, which passed into law after receiving Royal Assent last month, has moved the DB sector towards a new surplus framework and stated this creates the need for trustees and sponsors to establish scheme-specific approaches regarding surplus release, investment strategy, governance and member security.
The firm said its solution will combine its experience from its pensions, administration and insurance consulting practices to provide guidance to schemes to help them navigate the opportunities and complexities of running-on through the three core pillars of strategy, governance and administration.
Schemes will be able to adopt the solution as a fully outsourced approach, where all elements are run as a "one-stop shop" or use a more flexible version in which individual elements can be tailored to support a scheme's existing run-on framework. XPS added that to support its run-on solution, it has also brought together a group of schemes that are running on which will provide insights into the rules and practices around DB run-on.
Partner and head of DB run-on Tom Froggett said: "The Pension Schemes Act marks an important step towards a new DB surplus regime. The conversation is no longer just centred on whether schemes should run on, but on how trustees and employers can deliver the benefits of run-on in a safe, robust and efficient way.
"That brings a wide range of strategic and operational challenges, from investment strategy and surplus release planning through to governance and administration. XPS Integrated Run-On has been designed to bring these elements together into a single framework, helping trustees and employers optimise their DB run-on approach.
Froggett continued: "Ahead of today's formal launch, we have already supported clients over the past year in designing and implementing run-on strategies using this approach. This includes smaller schemes where a streamlined approach has enabled them to run-on efficiently, but also larger schemes looking to strengthen existing structures.
"So far, we have worked with more than ten schemes with combined assets of over £50bn, with feasibility studies underway for many more. We look forward to working with more trustees and employers in the coming months to help them deliver the benefits of DB run-on to their members and employers."
