The client is a mature DB scheme with a well diversified investment portfolio. Their Funding Proposal required further de-risking of their assets wile maintaining an overall return of 3.0% p.a. They had a strong employer covenant with a commitment to meeting the required contribution rate under the Funding Proposal.
The Trustees of the Scheme, along with LCP as its investment advisers, were faced with the challenge of keeping the overall expected return in line with that assumed in the Funding Proposal while continuing to increase it's liability matching asset allocation.
We proposed that the Trustees explore less liquid investment opportunities in light of the strong Employer covenant. The use of these assets did not increase investment risk, but they did have a low correlation with the other assets in the portfolio.
Our experts were able to give clear advice to Trustees about preferred managers, negotiate reduced fees for the client, and deliver pragmatic advice on the process of the asset transfer during the switch period.
The client was able to invest its funds with two additional managers, increasing it's liability matching assets while being able to maintain the scheme's required rate of return.
We were able to ensure that the asset switches were handled smoothly and were completed in good time. This meant a minimum of disruption to the scheme, and along with the reduction in fees meant that the cost impact to the scheme was also minimal.
How we can help
Fiduciary management is a hot topic, and has been a focus of the recent CMA review. We ensure that clients fully understand the pros and cons, and help them to put in place the right arrangements for their needs.
In an increasingly complex investment market we focus exclusively on the needs of our clients. We keep abreast of the entire range of investment choices and access options and simply deliver good value best in class advice.
Getting the investment strategy right is the most important task to help ensure good outcomes.
LCP Horizon is a one stop solution to meet your governance, communications and investment needs; enabling you to take effective, measurable actions to help your members.
Our intuitive, real-time pensions technology allows you to see the information you need when you need it, helping you to make decisions.
We help you focus on the areas of most significance, monitoring performance against the benchmark, funding level and manager contribution. This information can enable you to see what decisions have worked and why.