How to analyse member outcomes
When schemes are seriously considering moving into a superfund, it’s important to analyse member outcomes in some detail. This means conducting scenario analyses for individual member outcomes, not just looking at broad funding levels. However, modelling individual member outcomes has always been expensive and complex.
To simplify this essential step, WTW has built a cutting-edge calculation tool. Our Member Outcomes Modeller helps schemes compare the value of individual member benefits in different scenarios: if they were to enter the Pension Protection Fund as a result of sponsor insolvency, be covered by a bulk annuity policy through a buyout, or have their benefits paid by a superfund. The outcomes can be adjusted at the click of a button for different central investment strategies. Over time, the modeller will also be able to illustrate the impact of various scenarios over different timeframes – so, the picture next year compared to what the outcomes will look like in, say, five years’ time.
The tool is highly interactive, letting scheme managers look at the picture by different membership categories and sections of the scheme in real time. Your WTW lead can also model the impact of different shock scenarios, such as a fall in equities, an increase in inflation, or a longevity shock. Modelling the impact that different mitigating actions would have, such as setting up a longevity swap or carrying out a pensioner buy-in can also be accommodated, which allows scheme managers to easily and clearly consider strategic options.
