Managing Pension Scheme Liabilities

Our advice to trustees of final salary pension schemes includes practical guidance on managing its liabilities. It’s in the interests of members and the sponsoring employer to keep the cost of running the scheme as low as possible.

Our client was a long-running family business, with a final salary scheme for staff. They were becoming increasingly concerned about the open-ended cost of the scheme and whether the members valued the benefits they had.

We provided comprehensive advice on all of the options to deal with the liabilities. The employer decided to close the scheme to new members but continue it for existing members.

An alternative Money Purchase scheme was established for new staff.

We helped the trustees to communicate these changes to employees while clearly spelling out the scheme’s valuable benefits. Members who remained in the final salary scheme became more aware of its value and even agreed to proposals for increased member contributions to help manage the costs. With our help, the employer was able to contain costs and still afford to provide this important benefit.

We continue to advise the trustees on the practical issues involved with running their scheme. We helped them negotiate with the employer regarding the Scheme Specific Funding Assumptions used for their Actuarial Report. We provided practical guidance to help them understand all of the technical issues, and then liaised with the actuary to ensure procedures were followed. We also help deal with all compliance issues raised by Pension Act 2004 such as Trustee Training and Member Nominated Trustees.

Our hands-on advice helps the trustees and the employer run the scheme cost-effectively. If the trustees decide to finally wind up the scheme, we will be there to manage that process.