At WTW, we have designed a six-step process that will help to take the stress out of the process for trustees and scheme sponsors.
01
The first stage is understanding the rationale, especially in situations where the sponsor is putting the proposal to the trustee board. At this stage try to speak to the proposed superfund to understand its level of engagement and motivation. This first stage is very much exploratory.
02
The second stage is to get the facts on the table. What are the circumstances relating to the scheme and/or the sponsor? What is the balance of powers in the trust deed and rules? What is the position on the assessment of covenant and funding? What other issues could come into play; for example, does the scheme have illiquid assets that could delay or prevent progress?
This needs to be a truly collaborative process between your legal, covenant, investment and transactions advisers, as well as your scheme actuary, who will play a key role at this stage.
03
What could be your best alternative solution – or solutions – in the scheme’s current set of circumstances?
At the end of this stage, you should have a credible alternative baseline of solutions to the proposal initially put on the table to take you through to stage four.
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What might alternative solutions to the superfund proposal look like?
04
Compare your alternative solution/s against your starting point. Don't get bogged down at this stage with analysis. This is about developing clear recommendations, with member outcomes at the fore of the decision making.
05
It’s time to make a decision. What are you going to do and who do you need to help you with that decision? At this stage, your governance and stakeholder management processes will be in full flight.
06
Implementation can be quite wide-ranging. At this stage, you may decide on full implementation, which could mean a full transfer to a superfund. Conversely, you may decide that the best thing to do at this stage is to press pause and wait until circumstances change.
Thank you for reading. If you would like to learn more about superfunds, please contact your WTW consultant, Costas Yiasoumi or Hazel Kendrick. You could also read our interview with Clara’s chief executive, Adam Saron, or find out what the approval of the first superfund means for trustees.
