The information advantage: navigating the pension risk maze
29 March 2016
You don’t have to delve far into a daily newspaper to pick up on one of the many challenges currently facing Britain’s Defined Benefit schemes.
Whether it is market volatility, changing regulation or increasing life expectancy, the sponsors and trustees who are responsible for the stewardship of final salary schemes face a number of challenges in fulfilling their duty to deliver benefits to members.
Given the number of issues they face on a daily basis, and the scale of their responsibilities, it is unsurprising that many trustees and sponsors often feel overwhelmed by the task at hand. It can feel like being trapped in a maze. The ultimate goal – in the case of a maze, the exit – is obvious, but getting there is far more complex.
But just like a map of the maze would provide instant clarity to anybody who is trapped, a common platform providing timely, accurate information can have the same effect for those trustees and sponsors trying to navigate through the myriad challenges they face.
First of all, having accurate information can help you to understand your funding position in greater detail and with more clarity about what to do next; if you understand what you’ve currently got and what you need to deliver, you’ll be in a better position to make your assets works harder and more effectively. The same goes for liabilities, which, with the benefit of information, can be reshaped so that they pose less risk to you in the first place. Having all of this information easily accessible on a common platform can also help sponsors and trustees to start think holistically about the overall management of their scheme.
For many years, the pensions industry has had decision making hampered by overly burdensome and complex processes. However, for those in the driving seat of our Defined Benefit schemes, the advent of new technology platforms represents a step change in how they can fulfil their responsibilities. At the touch of a button, all of the information they need is at their fingertips, allowing them to make quicker, more informed decisions, reducing cost and bringing simplicity to an already over-complicated world.
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