Then there are schemes that are not quite there but with a little bit of luck, some ageing of the membership and good terms, they will make it in the next three to five years without the sponsor having to write a cheque. Then there are those who choose to invest in something that could deliver excess returns but the need for liquidity means there has to be a plan to exit less liquid holdings at the right time. You could split schemes broadly in those categories, but yield increases mean most of my schemes are well funded. There are discussions around surpluses which are not captured because the scheme is miss- ing pricing opportunities due to lack of preparation in other areas. As much as a transaction looks affordable, if you take a scheme to an insurer and the data is poor they will not be interested. Hartree: That can be a challenge for project planning. I love a project plan, but there is a risk that people get too wedded to the timings in them. We have talked about market opportuni- ties due to attractive pricing or assets per- forming better than expected and there has to be an element of flexibility to be nimble when opportunities arise. Pickering: I learnt late in life the impor- tance of an expected return on assets to


I had a client who was fully funded on a buyout basis in 2008, but by the time I was appointed it had fallen to 50%. They had done nothing wrong; it was just where the world was at that time meaning buyout was much cheaper. Pickering: It is important to have a project plan. The employer and trustee need to ensure that not only do they have the right ducks, but that they have their ducks in the right order. It’s about maximising the efficiency of the DB transfer and then deciding what to do with DC. You need a project plan to ensure that you are not caught unaware further down the track. Tiziana Perrella: My schemes have a clear vision as to what they need and what they are missing. Scheme data is usually below par as far as the insurers are concerned, which is a big issue. Sometimes your project plans concentrate on those aspects. There are sponsors where the perceived painfulness of the pen- sion scheme – due to its size or a corporate activity that they want to pursue – means they want to get rid of it. If they have to pay to do that, they will pay as much as they can afford.


American sponsors. It can often influence the timing of a risk transfer as they may not want to take a hit to their profit and loss account.


A project plan needs to be sensitive to the non-pension aspects so an employer does not find out late in the day that they will have a lot of explaining to do on Wall Street if their de-risking has an effect on the expected returns. Cusack: That has been a blocker for some of my clients. We wrote a project plan and had the data ready, but when we con- firmed that they understood this will impact the profit and loss, they pulled the pin. Perrella: That is why a conversation with the sponsor helps. Sometimes they want to buyout when they expect a poor year due to other activities or they have a balancing impact from other items so they do not mind losing out. The dynamics are interesting. Cartwright: It is an important conversation. There was a scheme I worked with that was fully funded on a buyout basis. In 2018


July–August 2022 portfolio institutional roundtable: Endgame investing 9


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