For some defined benefit pension schemes, immediate settlement with an insurer or consolidator may not be the preferred option. Running on — either as a long-term strategy or as a bridge to a future insurer transaction — can allow schemes to maintain control while targeting improved outcomes for members and sponsors.
Run-on strategies typically fall into two categories:
Self-sufficiency, this aims to minimise volatility and reduce reliance on the sponsor
Active run-on, this seek to generate a surplus that can benefit members and / or the employer. Contrary to common assumptions, active run-on does not necessarily mean taking on more risk—it can be structured to deliver secure outcomes while creating additional value.
In this video, John Harvey, partner at Aon, explores the different approaches to running on, the financial and governance implications, and how schemes can structure a robust long-term strategy. With the right framework, running on can be a viable and attractive alternative to immediate settlement.
