Will 2011 be a period of weak activity for managed wind
downs and enhanced transfer values?
Funding DB pension schemes can be risky, but there are a number
of ways that trustees and sponsors can control these risks. Smith
& Williamson has helped a number of schemes through enhanced
transfer value, or managed wind down (MWD) exercises, which have
resulted in both significant reductions in overall liabilities and
much smaller and less volatile residual commitments.
Market developments suggest the period up to April 2012, will
witness a resurgence in MWD activity.
What is a managed wind down?
A scheme sponsor offers to enhance the transfers that members
can make from a scheme to another approved pension arrangement, for
a limited period. These enhancements, if carefully calculated, can
be set at levels that are attractive to members who, with
professional advice, will view a transfer away from the scheme as
financially beneficial.
