Alana Corbett, Senior Consultant, Aon
A risk settlement project is likely to be the most difficult and high-stakes project that trustees and sponsors will undertake. It is a complex process and will be unique for each pension scheme. As a result, a specialist project manager is increasingly high on the agenda for both trustees and sponsors when starting their journey to settlement.
When embarking on your risk settlement journey, it can be a daunting experience to know where to start, so picking the right partner to guide you through this will often be more critical (and quantifiably beneficial) than many of the other difficult decisions required during the process.
So, what does it take to run a successful risk settlement project?
The importance of alignment
One of the first criteria for a successful transaction is to have complete alignment on the objectives of the project between the Trustee and the sponsor. Without this, an insurer will be wary of investing time in a project where there are clearly differing priorities from those involved from the offset.
An experienced risk settlement project manager will support with setting objectives to satisfy all parties, and ultimately deliver the desired results by understanding the pitfalls and solutions available to stay on course. This will include ensuring there is open communication throughout the project between all parties, and in particular, at milestone decision points – at a time when communication matters most.
The long and winding road
A risk settlement journey is a marathon, not a sprint, and on occasion, can feel like a gruelling cross-country, with many peaks and troughs! Understanding the typical life cycle of a project such as this, will allow the terrain to be levelled by using the quieter periods to prepare for the later busy periods.
Separately, (and to continue the running analogy), it's important to only join the race when you've put in the prep work. Rushing to market before you are ready, will result in a false start, and insurers can lose confidence in the reliability of your planned route to settlement.
Further down the line of course, the journey won't end at the point of buy-in and so seeking endurance from your project manager will also be vital. Having the continuity of a project manager from end-to-end, i.e. from initial planning to ultimate buyout and wind-up will ensure the smoothest possible journey for all involved.
Putting members first
Member experience is becoming an area of increasing focus and importance for many trustee boards and sponsors – and for very good reason. This can range from ensuring a high level of administration service from the chosen insurer to retaining member options already available in the scheme. But, with every insurer having different offerings impacting member experience, it can be difficult to know which way to turn.
At Aon, we are the only advisory firm that has performed due diligence on all insurers since the market's inception, including administration services, where we have pushed service development to deliver better solutions for members.
Often the key area of focus for many trustee boards is the level of administration service by each insurer since it directly impacts their members. Having this detailed level of information at their disposal, as well as access to member option specialists who understand the relative insurer offerings (both current and planned future expansions), our project managers can support you to feel empowered to make the best decision for your members and avoid regretting any decisions along the way.
Project managers specialising in risk settlement
We understand that in some cases, trustees do consider an independent project manager to ensure their project is given the attention it deserves. However, at Aon we are firmly of the view that having a dedicated risk settlement team who specialise in running these projects, while also being at the forefront of the advice is the optimal route to a successful transaction.
A good project manager will ‘sweat the small stuff' so you don't have to, bringing an inquisitive mind and an implicit understanding of all issues that will need to be resolved to make sure your members' benefits are accurately secured. This expertise and understanding comes from living and breathing the advice, providing an element of dynamism which, in our opinion, will always outweigh an independent approach.
For the largest decision in the scheme's lifetime, choosing a project manager who will provide the required level of attention while also having a talented team around them will help to achieve better outcomes for all stakeholders involved.
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