DB Pension Scheme Endgame: Preparing for the Final Stretch

Key takeaways:

• Many DB schemes are approaching endgame, but the final stretch requires as much planning as the journey so far.
• OCIO models streamline decisions and coordination, reducing inefficiencies, allowing trustees to focus on strategic decision-making during the final stretch.
• OCIO providers and fiduciary managers enable precise, real-time management to guard against last-minute market shocks, providing value for money.

For many defined benefit (DB) pension schemes, years of careful de-risking, governance improvements, and supportive markets mean the endgame is finally within reach.

However, as any runner knows, the final stretch is often the hardest part. A strong funding position does not guarantee a smooth finish, and without a clear, tailored strategy, schemes risk higher costs, funding volatility and missed opportunities.

Here are three key areas where we believe OCIO and fiduciary management models can help schemes as they approach and go through a buyout:

No two schemes share the same route to their destination. Pushing through the final stretch requires close, real-time coordination across advisers, including investment, actuarial, covenant, and legal inputs. When coordination breaks down, inefficiencies can quickly arise, for example when designing and implementing price-lock portfolios in preparation for a buyout transaction.

Like a fitness tracker, fiduciary management and OCIO models excel in providing real time information and coordination, serving as the central governance hub that integrates investment decisions, implementation and reporting.

For schemes with more complex portfolios, this joined-up approach can significantly reduce duplication, streamline decision-making and allow trustees to avoid potholes or take advantage of market opportunities. Importantly, all these activities are typically carried out with no additional fee, providing clear value for money in contrast to the traditional approach of time-cost or per-analysis fees.

At present, many DB pension schemes approach endgame under a traditional, consultant led approach. We’ve even seen some schemes switch back to the traditional model from the fiduciary management approach that has served them well to this point. Yet, while this may be right for some schemes, we believe this is the wrong move for most — while the traditional model is a tried and tested process, it’s not without its pain points.

Like a runner manually creating their route, under a traditional approach trustees are required to do lots of investment activity, including manager selection and instructions for trading. As interesting and enjoyable as “beauty parades” can be for choosing managers, on the final stretch we believe the area where trustees can add the most value is focusing on bigger decision-making — such as strategic asset allocations, overall funding objectives, insurer negotiation, and sponsor liaison.

OCIO model saves trustees from needing to directly instruct managers:

Source: Russell Investments 2025

An OCIO approach frees up trustee time and resource by allowing them to focus on value-add activities. A strategic adviser (which could be the fiduciary manager) advises the trustee who in turn decides the course of action such as asset allocation changes, appointing or removing managers, and liability hedge updates. The implementation of these decisions, as well as standard activities like rebalancing and re-/de-leveraging LDI portfolios, is outsourced to the OCIO, easing the governance strain while providing value for money as schemes approach the finishing line.

Lastly, much like tripping on the final straight, the greatest risk for DB schemes as they near buyout is a sudden market move (or a change of insurer pricing basis). Both could worsen the funding position relative to the buyout finish line, just as it comes into sight.

Once the buyout price is agreed, the insurer will require a scheme to move to a “price lock” portfolio to mitigate the impact of market moves. These strategies align closely with the insurer pricing basis and therefore move in the same way as the target value fluctuates, which helps protect schemes from these last-minute shocks. Yet, to do so requires building portfolios with precision and daily monitoring.

Particularly for larger schemes with complex positions, fiduciary managers and OCIO providers bring the coordination and speed needed to execute these strategies effectively, and monitor them carefully on a real-time basis.

An OCIO model can provide a variety of benefits in the lead up to the endgame, including price-lock execution:

Source: Russell Investments 2025

As DB schemes approach endgame, achieving a smooth finish requires more than just strong funding levels. Success depends on mapping the route, aligning portfolios, and ensuring all stakeholders move in step. Fiduciary management and OCIO models provide the structure and tools to turn these plans into action.

The final stretch is not the time to ease off — it’s the moment to finish with clarity and confidence.

If you wish to learn more about how we help schemes on their path to endgame, visit our website. 

Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.