Approaching endgame: completing your scheme’s journey

Every defined benefit pension scheme eventually needs to think about its endgame and consider how best to use its assets to provide member benefits. We work in partnership with our clients, supporting their scheme’s journey towards its endgame objective, whether that is self-sufficiency or buy-out.

Pension schemes have an increased focus on reducing both their funding level risks and their reliance on the corporate sponsor for their future health.

LGIM has significant scale and experience in implementing and managing endgame portfolios efficiently for defined benefit (DB) pension schemes. With our longstanding insurance heritage, we also manage our own group capital for the £51bn  annuity fund on behalf of L&G Group.

Buyout aware

By making use of a buy-out aware investment strategy, scheme assets can be more aligned with changes in buy-out pricing, helping schemes on their journey towards their endgame objective of achieving a scheme buy-out.

To build a buy-out aware portfolio, we invest in assets that are similar to those that a typical insurance company would hold and are sensitive to three key factors. In this way, as buy-out pricing changes, a scheme’s assets should move in a similar way.

Credit allocation is a particularly key factor; we scale our credit exposure according to our analysis of what credit allocation insurers are using in their pricing assumptions.

We leverage our investment expertise and close links with Legal & General Retirement annuity business to provide buy-out aware strategies.



By focusing on an investment strategy that is better aligned to the cashflow profile of the assets to the liabilities (cashflow matching), as well as matching changes to interest rates and inflation expectations (LDI), pension schemes can be more certain of meeting benefit payments over the longer term.

Cashflow aware investing is a good way for a scheme to be pro-active and plan for meeting a scheme’s cashflows over the longer term.

This can be done on both a pooled or a bespoke basis.