How can Parents Impact on Pension Cash Funding?

When it comes to parental back-up, how do actuaries factor it into their numbers?  Now, under new disclosure rules, actuaries have to explain what they’ve done to take into account the value of the sponsor’s covenant.  So, what if you change it?

There is a great opportunity for UK companies with strong overseas parents to seek a recount.  Where the parent is not a participating employer:

• What change comes to the length of the recovery plan or the investment returns expected should the parent now guarantee payments?
• What for limited or total parent guarantees pension funding requirements?
• What about bank or insurance guarantees organised by the parent to cover various contingent short-falls?

As time goes by and pensions become more of an historical factor that requires ever larger cash contributions, the time is right for a new look.  C-Suite Pension Strategies has the heavy-hitting resource of executives with corporate and pensions knowledge able to question whether the standard actuarial thinking is relevant.  Parents keeping their distance from adult children may usually be a good thing, but not corporately when subsidiaries end up paying away large sums quite unnecessarily to reach objectives which are not in the wider family’s interests.

“The financial support – both actual and possible – of parents for subsidiaries with pension obligations is often underestimated in covenant assessments.  It is in everybody’s interest for that to change and new actuarial disclosure rules can be the trigger.  Pension payment guarantees from the investment bank of mum and dad.”  William McGrath, Founder C-Suite Pension Strategies