Is your DB run-on fit for purpose?

Many DB schemes are creating a surplus management problem for themselves

Most don't know it yet.

As run-on has become a viable option, the industry has responded. Frameworks have been launched. Documents have been produced. Meetings have been held.

But look closely at most of them, and you'll find the same thing: 

A rebadged Journey Plan. The Journey Plan is a powerful tool. But it was built for a different problem - growing a scheme to a strong financial position. Repackaging it as a run-on framework doesn't change what it is. And it doesn't change what it gets wrong.

Worst of all, using an incomplete model to determine surplus policy leaves the Scheme at major risk of value destruction.

There are five areas where a rebadged Journey Plan misses the mark 

- on focus, consequence of error, modelling, principal action, and covenant integration.

See more on this in the attached:

JP Problems run-on.pdf

Download PDF • 75KB

So, are you looking at a rebadged Journey Plan instead of a dedicated run-on framework? 

Here are four tells.

1. Covenant is mentioned… but not doing any real work

A strong sponsor underwriting pension risk means:

Less capital needs to be trapped in the scheme 

More surplus can be shared

As the sponsor can be relied on.

Covenant shouldn’t be a footnote. It should drive the answer.

So ask a simple question:

👉 Can you quantify the difference covenant is making to the outcome?

If the answer is “not much” - you’re likely looking at a rebadged Journey Plan.

2. No answer on what to do with surplus that already exists

This is a BIG one.

Most DB schemes already have material surplus today. There's ~£200bn of surplus right now across the system - that's significant.

A real framework should be explicit about:

How much needs to be retained for risk management

How much could be distributed

And on what basis

If the focus is only on future surplus…

👉 The hard decision is being avoided.

3. Over focus on long-term upside

Journey Plans are built on:

Return assumptions

Growth over time

So you’ll often see:

 👉 “Here’s how much surplus you could have in 10 years”

But in a run-on context where we begin in significant surplus, the key question is:

👉 What can you safely do with the surplus that already exists?

If the framework leads with long term upside projections, it may be solving a different problem.

4. Buyout as the default benchmark

Buyout is a valid reference point. But it’s not universally relevant. 

It really matters when:

Covenant is weak, or

Buyout is the stated objective

Using it as the default anchor for all schemes?

That’s years of habit - not strategy.

Surplus sharing isn’t properly answered by a rebadged journey plan - it's a different problem altogether:

👉 Not so much how to get "there"

👉 But how will you know & act when you already have enough?

The Surplus Management Framework (SMF) is a proprietary purpose-built governance tool built to support the decisions that matter - integrating funding, investment and covenant risks into a single, coherent framework.

The SMF helps to transform surplus distribution from a potentially contentious negotiation into a structured, straightforward, risk-based decision furthering the interests of all scheme stakeholders.

Contact us to find out more.