Many DB schemes are still a distance away from the finish line. The PPF’s Purple Book 2022 reported that 40% of DB schemes were under 75% funded on a buy-out basis. Funding levels have improved for many schemes since then, but a sizeable portion of the market will still be reliant on their sponsor for an extended period of time, potentially leaving members’ benefits at risk.
These schemes have had limited options, to support them in achieving their end game, beyond the traditional services offered.
The PSS places a very substantial capital buffer between the scheme and the employer, which is intended to absorb adverse deviation in the scheme’s funding position through time.
Providing the benefit of continuity, the scheme’s governance structure does not change. Its existing advisors, the trustees, and the link to the employer are maintained. The capital buffer and the scheme’s assets are invested in a 30:70 matching / growth investment strategy focused on liability driven investing and incorporating private market opportunities.
PSS seeks to deliver the following benefits:
Increased certainty of receiving their benefits in full
Protected against calls for further cash contributions; longevity, falling interest rate and rising inflation risks; poor investment returns
Almost entirely removing covenant risk
Seasoned industry leader with deep expertise in the UK pension & risk transfer markets
Established industry reputation and credibility with leading schemes & trustees
Strong risk management & actuarial expertise
$369bn assets under management, with extensive product & sector specific investment expertise to identify deployment opportunities
Established origination & underwriting capabilities, refined over three decades
Global investment capabilities to drive returns and offer leading asset management expertise