Consultancy Services - Liability Management

Transfer Value Exercises
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Rob Dales FIA Rob Dales FIA /uploads/contacts/contact_20.jpg 3rd Floor, Bond House The Bourse Boar Lane Leeds LS1 5EN 0113 203 5883 0779 909 4392 0113 203 5862 rob_dales@jltpcs.com Rob joined PCS in 2007 having previously been a Director at KPMG for 10 years. Rob has 20 years experience of advising Trustees and companies on all aspects of pension matters but in the last 10 years has specialised in providing advice to the company. Rob’s particular expertise is in designing and implementing liability management solutions for pension schemes. He was one of the first actuaries to implement an enhanced transfer value exercise back in 2002. Rob has extensive experience in assisting companies with the more complex aspects of pension arrangements including Scheme Funding, dealing with the Pensions Regulator and the pension implications of corporate transactions and insolvencies. Rob has written several articles which have been published in the Financial Times, Pensions World, Yorkshire Business Insider and Professional Pensions. Rob is also co-author of "An Introduction to Pensions" published by Gee. After graduating with a first class honours degree in mathematics in 1987, Rob qualified as a Fellow of the Institute of Actuaries in 1992.
Simon Taylor FIA Simon Taylor FIA /uploads/contacts/contact_21.jpg 6 Crutched Friars London EC3N 2PH 020 7895 7809 0792 054 3015 simon_taylor@jltpcs.com Simon has over 20 years' experience of advising companies and trustees on all aspects of their pension and benefit arrangements. After spending more than 15 years at a competitor firm, specialising in giving advice to pension scheme sponsors, Simon joined what is now JLT Actuaries and Consultants in 2006 and was Head of Corporate Consulting before becoming part of the JLT Group in late 2009. Simon currently sits on the Board and Executive of Pension Capital Strategies with a specific focus on driving sales and introducing new initiatives. His current clients range from FTSE 100 retailers through well known media companies to small family run businesses. Whilst mainly giving advice to companies, he also has several Scheme Actuary appointments which enable him to give more rounded advice to clients. In particular, Simon specialises in risk and liability management and reduction, scheme funding and accounting and benefit design.

Enhanced Transfer Values

Pension liabilities are a material factor in the success of a business. The triennial actuarial valuation now often leads to trustees seeking significant increases to contributions and the volatility of the financial markets leads to uncontrollable changes in accounting deficits. Whilst a bond-based investment strategy can reduce the volatility, it does come at a cost and is no defence for increasing longevity.

Increased contributions do reduce the deficit, but there is no way of getting these back if you pay too much and it does nothing to reduce your exposure to the liabilities.

Companies generally have some control over factors that impact the business, but this is not the case with pension liabilities. The only real solution is to remove the liabilities. This can be achieved by buying out the benefits with an insurance company but, even with the recent changes in this market, the costs are still significantly higher than most companies are prepared to pay.

One option is to offer members an opportunity to transfer their benefits out to another pension arrangement, usually a personal pension plan. This is effectively a transfer of risk from the company to the member.

The current transfer values offered by most trustees are not sufficient for the majority of members to accept this transfer of the investment risk. So that the option to transfer might be considered suitable by the member, the trustees could offer an enhanced transfer value.

An extension of this option is for the enhancement, or part thereof, to be paid by the company direct to the member as cash (after tax and NI are deducted). Our experience is that providing this option for members improves take up rates.

PCS Transfer Value Analysis Modeller

For further details, please contact us.