State owned enterprise achieves 30% cost saving with innovative new pension scheme

“Acuvest has created a highly innovative product that delivers a 30% saving on the overall costs of running the scheme, plus the peace of mind of active management at every level. Their position of independence and willingness to meaningfully engage with and listen to all stakeholders during the design phase was critical to securing member buy-in and ultimately the successful re-launch of the scheme”.

A State Sector Client

The Client Challenge

With the backdrop of a complicated multi-employer DB scheme now closed to future accrual that had created a history of HR and management challenges, our state sector client was under pressure to deliver a solution that could rebuild trust, turnaround the negative association with pensions amongst members and reduce the risks of potential industrial unrest. They required a DC scheme that employees and unions could engage positively with and one that would deliver an outcome on a par with the best in the marketplace.

Our Solution

To ensure a member-focused solution that would deliver the best outcome for all parties, we first engaged with each stakeholder group. We met with unions to listen to the key elements of their preferred pension solution and also analysed the different groups of member data to understand their differing needs and expectations.

Combining our full range of advisory capabilities with our market leading expertise in data analytics, independent active asset allocation and fund management, we transitioned the scheme from a single fund, single manager investment fund to a custom designed solution that gave access to a better choice of funds at lower cost. We combined passive elements with actively managed elements, and an independent active asset allocation overlay, with the sole target of adding value to member outcomes. This highly innovative product was delivered by a bespoke team of specialists in an extremely efficient open investment platform. Our solution facilitated active management at very low cost and with active monitoring at every level we ensured both better asset management and better governance.

 

The Results

The cumulative impact of lower management costs over time means that an average member will see a 10% improvement in their accumulated savings at retirement, in addition to the benefit of active asset allocation and having a better choice of funds available.

With strong member participation, extremely positive feedback from employees and, most critically, the backing of their unions, our client now enjoys the benefits of a best-in-class, flexible, client branded solution, overseen by a well-governed board of trustees, that has removed much of the uncertainty and legacy negativity previously associated with pensions, and is aligned with both the employer’s future business strategy and employee interests.

What the client said:

“Acuvest has created a highly innovative product that delivers a 30% saving on the overall costs of running the scheme, plus the peace of mind of active management at every level. Their position of independence and willingness to meaningfully engage with and listen to all stakeholders during the design phase was critical to securing member buy-in and ultimately the successful re-launch of the scheme”.

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