The majority of pension schemes are considering a wider range of strategic priorities alongside member security when setting their endgame strategy, according to a poll conducted by LCP.

The poll, carried out during a recent LCP webinar, found that while 45 per cent of respondents identified benefit security as their primary strategic priority, a larger proportion (55 per cent) said it was one of several important factors.

These additional considerations included opportunities to improve member benefits, the potential to return surplus to sponsors, value for money in risk transfer, and the role of illiquid assets.

LCP said that improving funding levels, higher yields and the emergence of new market solutions had expanded the range of endgame options available to defined benefit (DB) schemes, moving the market beyond a binary choice between run-on and buyout.

With this in mind, the firm emphasised that trustees and sponsors must clearly define their strategic objectives at the outset, including the relative importance of member security, benefit levels and financial outcomes for sponsors.

It also highlighted the importance of scheme-specific factors, such as the balance of powers in scheme rules, sponsor covenant strength, and the respective risk appetites of trustees and sponsors, all of which may influence the viability of different endgame routes.

The webinar included case studies such as the recent acquisition of the Stagecoach Pension Scheme by Aberdeen, with insights shared on the strategic drivers behind the agreement and the factors shaping the run-on arrangement.

LCP partner, Laura Amin, noted that the findings pointed to a growing number of schemes still evaluating their options.

“The fact that 25 per cent of our webinar registrants were ‘undecided’ on their scheme’s endgame strategy suggests a significant number of schemes are currently navigating the increasing range of endgame options,” she stated.

“With more routes available than ever, there’s no one ‘right’ answer for schemes.

"What matters is a disciplined, joined-up approach - agreeing strategic objectives upfront so that all options can be assessed against these and with an understanding of what scheme-specific factors might favour one route over another.

“In this context, run-on, insurance and consolidation can each deliver strong member outcomes which are aligned to the sponsor’s and trustee’s objectives.”

LCP partner, David Fairs, added that while there was no ‘preferred’ endgame option from a regulatory perspective, The Pensions Regulator (TPR) would expect schemes to think carefully about their specific circumstances and be able to set out a clear rationale for their endgame strategy.

“With the pace of change in the market - as evidenced by the Stagecoach deal and with some insurers and superfunds now offering ‘value share’ transactions - the Department for Work and Pensions and TPR will be keeping a keen eye on developments, and we may see further guidance in due course," he said.

“This may help those schemes who remain undecided on strategy - albeit there is the risk for these schemes of missed opportunities, which in itself is a risk to manage.”

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