The Building Blocks of a Successful Defined Benefit Endgame Strategy
The Building Blocks of a Successful Defined Benefit Endgame Strategy
In our recent article “The Long‑Term Future of Your Defined Benefit Pension Scheme”, we introduced the concept of the Defined Benefit (DB) endgame and the main routes schemes typically take as funding improves and risk reduces. Once an organisation has started to think about its long‑term destination, the next step is understanding what needs to be in place to reach that outcome in a controlled and well‑governed way.
While every scheme is different, successful endgame strategies are usually built on the same core foundations. Getting these right early can make a significant difference to cost, risk and outcomes for both employers and members.
- A clear funding plan and journey
A strong endgame strategy starts with clarity on funding. This means setting long‑term funding targets that align with the employer’s objectives, the strength of the business and the level of risk the organisation is prepared to support over time.
Good journey planning looks beyond the next valuation date. It sets out how funding is expected to improve, what contributions may be needed, and when de‑risking actions or transactions could realistically take place. Importantly, it also considers what happens if things do not go to plan, for example if markets are volatile or business conditions change.
By stress‑testing the strategy under different scenarios, trustees and sponsors can be more confident that the plan is realistic and resilient, not just based on best‑case outcomes.
- Investment strategy that supports the endgame
As schemes move closer to their long‑term goal, investment risk matters more than ever. Reducing reliance on growth assets, increasing exposure to assets that better match pension liabilities, and managing cashflow and liquidity needs all help protect funding progress as schemes mature.
Investment de‑risking works best when it is planned in advance. Agreed frameworks allow risk to be reduced gradually as funding improves, rather than reacting to market movements under pressure. This helps reduce volatility and supports greater certainty around when endgame targets might be reached.
- Accurate data and clear benefits
Data quality and benefit accuracy are often underestimated, but they can have a material impact on endgame outcomes, particularly where insurance solutions are involved. Insurers will price any uncertainty, which can increase costs or delay transactions.
Ensuring member data is complete and accurate, benefits are clearly defined and historic practices are properly understood gives schemes a much stronger position. This work often takes time, which is why starting early is so important. It also helps build confidence among trustees, sponsors and members that liabilities are properly understood and managed.
- Strong governance and aligned decision‑making
Governance underpins every successful endgame strategy. Clear alignment between trustees and the sponsoring employer, well‑defined roles and responsibilities, and effective adviser coordination all support better decision‑making.
As schemes move towards their long‑term objective, opportunities can arise quickly, particularly in insurance markets. Having the right governance arrangements in place allows decisions to be made efficiently and with confidence, reducing execution risk and avoiding unnecessary delays. Clear and timely member communications are also a key part of this process, helping maintain trust and understanding as the scheme evolves.
Bringing the strategy together
These four building blocks work best when they are developed together. Funding, investment, data and governance are closely linked, and progress in one area often depends on the others. Taking a joined‑up approach helps schemes move steadily towards their chosen endgame, rather than reacting to events as they arise.
How we support DB endgame planning at Unio Employee Benefits
At Unio Employee Benefits, we work alongside employers and trustees to put these foundations in place and support them through each stage of the DB endgame journey. Our integrated approach covers funding strategy, investment de‑risking, data and benefit readiness, governance and market engagement — always with a focus on delivering the right long‑term outcome for both members and the organisation.
Starting early allows choices to be made deliberately, reduces unnecessary risk and helps avoid surprises. With the right planning, the DB endgame can be managed as a controlled and well‑governed process, rather than a problem to be solved later.
Next steps
If you would like to discuss how your scheme is positioned for the long term, please contact your client manager or email Aidan.Mulvihill@unio.ie.
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