Liability Management

There are several options available to help manage risk in defined benefit (DB) pension schemes. We work closely with clients to assess all the options available and identify the most suitable opportunities to pursue.

At one end of the spectrum there is the purchase of annuities from insurance companies to hedge all risks associated with the members covered by the annuity contract. Yet for many schemes the cost of this is currently beyond their means.

There are, however, other less costly options that can help companies that wish to reduce the magnitude and volatility of their DB scheme costs and that help move the scheme nearer to full funding or to other long-term goals such as buyout. These options also give members greater choice and flexibility over their benefits.

Provided such options are communicated clearly and fairly, and members are supported so they can make informed decisions which suit their particular circumstances, then the result can be a ‘win’ for all concerned.

Willis Towers Watson has supported clients in Ireland through a number of voluntary member option exercises which were successful in reducing pension risk including:

• Retirement Transfer Options (RTO)
• Enhanced Transfer Values (ETV)
• Pension Increase Exchanges (PIE)

There are a variety of reasons why Companies carry out these exercises, including:

• Risk reduction
• Avoidance of annuity strain at the point of retirement
• Improvement in funding position and company balance sheet and P&L position
• Reduced operational costs
• Improved choices for members.

How can Willis Towers Watson help?

Willis Towers Watson has considerable experience in providing complete solutions covering all aspects of liability management exercises. We believe Willis Towers Watson is uniquely placed to work with you in achieving your objectives for your scheme.

• Unrivalled expertise. Our corporate consulting specialists can offer unrivalled expertise in designing and implementing liability management exercises across a range of schemes, from the biggest to the smallest.
• Market-leading approach. We have a market-leading approach to risk management and have been a pioneer of well-run, best practice exercises.
• Best practice. Recognising lessons learned and best practice from other jurisdictions, we have developed a set of guiding principles for Irish exercises.
• Project management. Our approach focuses on effective project management to provide a framework for efficiently run exercises and on time delivery.
• Tailored solutions. Most importantly, we are willing to work with you to design and implement the exercise that is right for the company, the trustees and the scheme’s membership.