We have entered a new paradigm for most UK DB pension schemes, accelerated by the events of 2022. There are several factors which validate why a new approach to investment advice is required.
- Many scheme funding levels are well over 100% on a low risk basis.
- Over 80% of UK private sector DB assets are managed by less than 10 organisations.
- The regulatory direction of travel for DB pensions has appeared to favour consolidation and de-risking.
- 1 in 6 asset managers globally are expected to be swallowed up or fall by the wayside by 2027.
- Mansion House 2023 speech and higher interest rates have added the dimensions of use of surplus and investment in “productive assets” whilst highlighting a desire to maintain gilt market stability and to fund “productive investment”.
- Pension trusteeship is rapidly professionalising which means advice requirements are changing.
A new perspective is needed
Trustees overseeing relationships with a large number of asset managers is a cumbersome approach and costly, particularly as schemes approach their end game. For pension schemes with higher return requirements, turbulent markets mean agility is key. This has been a struggle under the traditional model. Innovation is paving the way for schemes of all sizes to access services previously thought out of reach.
Schemes need simple, robust advice aligned to their objectives. Trustees need a skill set which is broader than traditional investment consulting. The traditional model is already being replaced with a consolidated solution, which sits somewhere on the spectrum from either:
- A streamlined provider approach through to Outsourced Chief Investment Officer model (OCIO) all the way to;
- A full Fiduciary Management model (FM).
The OCIO model separates strategic investment advice from implementation. The FM model combines the two. Both can also take important factors like ESG into account.
What do Trustees need from here?
Objective and focused strategic investment advice
Our depth of unbiased knowledge and independent expertise in the pension and asset management space brings a fresh take.
Support advising new complex problems
PwC has a deals mindset and a culture of solving problems, being flexible and not perpetuating the status quo.
Simple robust solutions, targeting end game
Our objectives are aligned with yours, and we have helped schemes of all sizes achieve their goals.
Our Investment beliefs
Strategy and Risk
- Having the right strategy is what drives success, it cannot be set and forget; it is important to spend time to tailor and evolve strategy to align to a schemes journey and stakeholder values.
- The risks faced by a scheme are multi-faceted, investment risks need to be considered holistically and not in isolation to ensure only rewarded risks are taken.
Implementation and Governance
- Demonstrating ongoing value for money to scheme members is paramount but this can be eroded by unnecessary complexity; impartial advice and ongoing oversight are required to avoid this.
- A strong working relationship between the Sponsor and the Trustee is critical to ultimately securing member benefits; a robust decision making structure is required for success.
Impartial strategic advice, focused on your specific end goals and risks
- We have a long track record of providing expert strategic advice to pension schemes and corporates, in the pensions space and broader.
- Our business is built upon adaptation, and supporting others through the challenges a changing landscape poses. This sets us apart from our competitors, and we are ideally placed to help you achieve your end game.
- We work flexibly with you, aligned to your budget.
- Our business is not focused on extensive manager research and rotation, where the value is questionable in the new world schemes operate in. We are focused on providing a cost effective solution to clients.
- We are optimally positioned to provide oversight and strategic challenge to advice you receive from a fiduciary manager or a strategic overlay to an OCIO relationship.
Objective provider selection, implementation and monitoring
- Our understanding of the investment market and experience working with a broad range of schemes means we can holistically advise on the right governance solution for you and, if required, run a selection exercise to find the best fit to suit your requirements.
- Our experience with the investment asset managers that manage the majority of pension scheme assets is borne out of the groundbreaking deals we have advised on and our brand in oversight selection and monitoring services.
- We work flexibly with you to give you advice aligned and tailored to your budget. Technology is our friend and we use this to delivery efficiency.
- We dont believe this is a tick box exercise: we can bring real value add to your scheme in this space.
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