Jo Gyte, Partner, Hymans Robertson

Apr 03, 2025

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Jo Gyte, Partner at Hymans Robertson, comments on warnings that the costs to corporate sponsors could be significant if they don’t consider their risk appetite before engaging with insurers, as they plan a buy-out and wind-up of their defined benefit (DB) pension scheme.

Hymans Robertson analysis suggests prior to engaging with insurers, the appetite for risk must be fully understood and meet the needs of both trustees and sponsors. Understanding the main types of risk is key to avoiding unexpected future costs. Getting to grips with these risks – surplus, timing, member experience and residual risk approach – will also influence what actions corporates can take to reduce risk at all stages.

Commenting on the need for risk to be considered at the start of any endgame planning, Jo Gyte, Partner, Hymans Robertson says:

If buy-out is the scheme’s chosen endgame, it’s imperative that a plan is put in place as early as possible to avoid spiralling costs further down the line. Upfront alignment and clarity will set the right path from the outset, and facilitate timely decision-making along the way. A sponsor must take control and engage with the trustees early in the process to answer key questions. These include how any potential surplus will be distributed, the preferred timing for completing the buyout, expectations regarding the experience of the scheme’s members and the approach for managing the risk of further liabilities emerging in the future, including following the wind-up of the schemes. The buyout and wind up of a DB pension scheme is the most substantial project that a scheme will ever complete. Even once a buy-out has concluded, there may still be consequences for a sponsor, financially and beyond – further reiterating the need to ensure risk is built into plans right from the beginning.