Trustees and sponsors of defined benefit (DB) pension schemes could miss investment opportunities and take on unnecessary risks if they delay endgame decisions, Hymans Robertson has warned.

The consultancy's Endgame planning: out of limbo, into action paper said that schemes needed a joined-up plan that worked with their investment strategy.

Inaction could leave schemes holding unsuitable assets and exposed to unnecessary investment risk, limiting future endgame flexibility.

The firm said trustees and sponsors should act now to avoid 'endgame limbo'.

Hymans Robertson, partner and co-author of the paper, Ross Fleming, stated: “All schemes are different, and each one has to find their individual best path through regulatory change, while at the same time bringing key stakeholders on the journey.

“The range of options on the table, and the perceived complexity, can be daunting for even the most focused trustees and sponsors. But schemes that delay decision-making may be missing out on opportunities or taking unnecessary risk, as a by-product of their delay.”

Fleming said there are 'no regret' actions a scheme can take, such as ruling buyout in or out.

He argued that schemes that understood their portfolio’s liquidity, how quickly assets could be converted into cash, and how easily the portfolio could adapt to different future scenarios were at an advantage.

“The importance of not leaving decisions to the last minute cannot be underestimated,” Fleming continued.

“Trustees and sponsors may have different opinions on what is right, what is best for members and how to reach such decisions, but striking a common ground between the two groups is key – and at speed. Waiting for a universal agreement can come with its own costs.”

Hymans Robertson, partner and head of investment risk transfer, Russell Chapman, who contributed to the paper, added: “From our experience, the most successful journeys to buyout are built on deliberate decisions, a unified and clear sense of direction and an investment strategy that is flexible and able to evolve as objective become clearer.”

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