Landmark industry-wide scheme wind up

In March 2017 we completed a landmark buy-in of liabilities with Aviva for the Federated Flexiplan No.1. This is the latest in a series of major events for this scheme since we were appointed trustee in 2007 and we believe is a unique achievement in the pensions industry.

This case study summarises just some of our key achievements as trustee of Flexiplan. We encourage anyone with an interest in the governance of industry-wide multi-employer schemes to get in touch so that we can share our experiences and discuss how we might be able to help you.

Bringing together the employer body
Flexiplan is an industry-wide pension scheme for over 200 employers in the charitable sector. After being appointed as trustee in 2007 we convened and a general meeting for all employers in order to establish an appropriate governance structure for the scheme. This resulted in the creation of a formal consultative committee to represent the employers’ interests. We have held regular meetings with this committee over the last ten years which have resulted in improved decision making and strategic direction for the scheme.

Setting the strategic direction
Once this governance structure was established we listened to the wishes of the scheme’s employers and agreed to set a long term goal of winding up the scheme and protecting members’ benefits by securing annuity contracts to pay their pensions.

Resolving historic uncertainty
Over the course of 2012 we applied to the High Court for directions as to the benefits payable to a large number of the scheme’s deferred members. There was a great deal of confusion in this complex area which was caused by the scheme’s rules and questions over decisions made by our predecessor trustee. The conclusion of the court proceedings meant that we had achieved certainty over the scheme’s benefit structure and could proceed with plans to wind up the scheme and insure members’ benefits.

Encouraging employer engagement
A big problem for many industry-wide pension schemes is ensuring prompt payment of contributions from a wide and disparate group of employers. Over the course of a number of years our proactive employer engagement strategies moved the rate of employer contributions paid on time from 80% to almost 100%. This was a key factor in us being able to meet our long term objectives significantly ahead of schedule.

Continuous investment strategy monitoring
Another major landmark as the scheme’s funding level improved was the creation of a specialist investment subcommittee which consisted of representatives of Entrust and the employers’ consultative committee along with relevant investment and actuarial advisers. The investment subcommittee carried out monthly reviews of the investment strategy and oversaw a gradual derisking exercise in order to secure and stabilise the funding position as we moved closer to meeting our objectives.

Seizing the opportunity
As the scheme’s funding position continued to improve, we worked with our advisers to ensure that a plan was in place for the ultimate goal (a full buyout of liabilities) to be secured as soon as possible once market conditions were appropriate. This meant that we were able to complete a complex transaction with many moving parts at short notice and two years ahead of the original target date.

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If you would like to find out more about how we can help you, please contact us.