Your Company’s Defined Benefit Pension Scheme: Where are you today and where can you get to without cutting a cheque?
In the post BHS/Carillion world the Government and its regulating bodies are introducing a host of new rules and expectations of defined benefit pension schemes. The most important change is that The Pensions Regulator now wants the scheme to be funded to self-sufficiency or to buy-out levels. That means, if the scheme’s assets are not giving the returns required, the company will have to fund the shortfall in cash.
This places the company in a difficult position. If it turns down the trustees’ request for cash then it can come under pressure from the newly powerful Pensions Regulator:
The Finance Director still needs to allocate capital effectively and look after all interested parties i.e. the company, members of pension scheme, shareholders and current employees. Further, there are governance issues to be readdressed about how Boards set pension policy.
The Pensions Regulator will drive the trustees of pension schemes towards aligning with buy-out funds and advisors’ thinking supports derisking all the way.
C-Suite Pension Strategies has prepared a proposal which turns the current thinking on its head. It allows companies to provide new money for the scheme, increase investment returns and reduce cash demands.
The C-Suite Proposal:
There are other issues to consider. The improvement in pension funding position this year will be encouraging trustees to look for more derisking but similarly, the cost of insuring self-sufficiency is achieved will also now be lower. The investment strategy may need a review. The recent Competition and Markets Authority review, called for more competitive tenders from investment management contracts. Those factors make it a good time to consider the best available investment and fiduciary offerings.
We can look at the position for any pension scheme and from those basic numbers can work out what proposal should work for all parties.
Our proposal can help you manage your capital and renegotiate your contribution pattern. We are partners to some of the leading consultants engaged with pension funding issues who are ready to devise and implement proposals.
We will review your current position and look at how to use Sponsor Contribution Insurance as one of your bargaining tools. Cash contribution levels are part of the discussions. By offering something tangible and new, the company takes the initiative and trustees will need to review their priorities.
You can achieve a great deal without overuse of the cheque book.