Targeted liability
management - Retail sector

Case studies

The background

As part of an ongoing and proactive approach to managing down pension risk and volatility, the company concluded that targeted liability management for subsets of its pension scheme membership would be both attractive to members, and also financially positive for the scheme funding position and the company accounting position.

Within the company’s longer-term strategy of insuring the pension obligations, proactive and clearly communicated liability management initiatives were also expected to improve the buyout position and help the company get to buyout more quickly.

Our solution

Having analysed the cost/benefit, with LCP’s support the company chose to proceed with a Flexible Retirement Offer.

  • Under the terms of the offer, specialist financial advice for eligible members was paid for by the company. To enable the company to manage and budget for the likely financial advice costs, eligible members needed to be above a certain age and have scheme benefits which were valued above a pre-agreed threshold.  
  • In addition, we worked with the company to propose an innovative solution whereby two of their pension schemes were merged, in a way which enabled a large number of scheme members with relatively small pension benefits to exchange these benefits for immediate and meaningful lump sum payments.

In both exercises, time and care was taken to ensure that member communication materials were easy and attractive to read, and that they avoided pensions jargon wherever possible.

The result

Thousands of members benefitted from the exercises, whilst the company achieved a material P&L credit and a reduction in its buyout deficit which equated to tens of millions. The reduction in pension obligations achieved from transfers out and lump sums has also significantly reduced ongoing risk and pension volatility for the business.  

The quality of the communications and the terms of the offers led to extremely positive member feedback.

The company is now considering whether to offer funded advice on an ongoing, business-as-usual basis, given the success of the project.

How we can help

Contingent funding approaches are rapidly becoming more widespread. They can be a great way to protect member benefits as well as the shareholders and other creditors of the sponsoring employer.

We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.

We help trustees understand and monitor the employer covenant.

Whether to enter a DB Consolidator is a complex decision. Sponsors and Trustees must be sure it is the right decision for their scheme and its members. We can help.

We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.

We help trustees achieve their strategic goals, with solution-led, appropriate advice.

Contingent Funding Handbook: Emerging trends and market practice

Contingent Funding Handbook: Emerging trends and market practice


A great way for Trustees and Sponsors to protect member benefits as well as the shareholders and other creditors of the sponsoring employer.