Hymans Robertson has challenged several common 'myths' surrounding defined benefit (DB) pension scheme run-on strategies, arguing that trustees should consider the full range of endgame options rather than defaulting to buyout.

In a new paper, Debunking the myths of run-on, the consultancy sought to address concerns around the risks, practicality and governance of running schemes on beyond full funding.

The paper argued that while buyout provides certainty, run-on should not automatically be viewed as a riskier option.

According to Hymans Robertson, well-funded schemes with strong governance, appropriate investment strategies and a supportive employer covenant can use run-on to generate additional value for both members and sponsors.

The consultancy also challenged the perception that run-on requires a long-term commitment.

It suggested that many schemes are now considering run-on periods of between five and 10 years to allow assets to grow further, improve insurer pricing or allow illiquid assets to mature, while retaining the flexibility to pursue buy-in or buyout at a later date if circumstances change.

Hymans Robertson further argued that run-on is not solely an option for the largest pension schemes.

While scale can be advantageous, it said smaller schemes with strong funding positions, supportive sponsors and clear objectives could also benefit from run-on strategies, particularly as new superfund and value-sharing models emerge.

The paper also stressed that trustees, rather than sponsoring employers, should lead decisions around run-on.

"Trustees are firmly in the driving seat," the consultancy stated, arguing that trustees have a duty to explore all credible endgame options and to ensure that any decisions align with members' interests.

Meanwhile, Hymans Robertson suggested that strong funding, clear contingency planning and proactive engagement with surplus-sharing opportunities could help schemes reduce covenant dependency while maintaining control over member outcomes.

However, the consultancy warned against schemes that take a passive approach to endgame planning, arguing that failing to establish clear objectives, investment strategies, and risk management frameworks could lead to missed opportunities or costly reversals further down the line.

Referring to The Pensions Regulator's Funding Code, Hymans Robertson noted that trustees should have a credible long-term plan in place, even where they wish to keep multiple endgame options open.

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