Pension Scheme Buyout Solutions
In recent years, changes in regulations and accounting standards have meant that running a defined benefit arrangement has become significantly more onerous.
Current funding regulations tip the balance of power in favour of the trustees when it comes to what contributions the employer should pay. Stricter accounting standards require pension costs to be reported in a realistic way consistent from year to year, with very little scope for smoothing. And since 2003, solvent companies have not been able to exit a pension scheme without funding the scheme to the full buyout level. The bad news for employers is that the outlook is not likely to improve in the short to medium term. Further improvements in longevity, continuing market volatility and an increased emphasis on governance and regular disclosures are likely to make defined benefits provision more expensive than ever.
Managing the risks associated with a final salary scheme may therefore be one of the biggest challenges that a Finance Director has to face. Whilst it is true that the "nuclear" solution of full buyout may not be suitable for everybody, it is also true that the range of opportunities available on this rapidly changing market is sufficiently vast (and in many cases, inexpensive) to suit most circumstances - not investigating such opportunities may be very hard to justify.
The increase in the level of sophistication within the de-risking market has meant that consulting in the de-risking and buyout areas is now a specialist job. Even in the context of a straightforward bulk buyout exercise, increased competitiveness means that specific skills are required to achieve the best possible price available from the whole market, ensure that there is an auditable, compliant process in place to see the exercise through.
PCS has developed extensive consulting experience in the fields of both de-risking and buying out liabilities. We offer a unique programme that identifies five key steps and considerations we believe are crucial to a successful and efficient de-risking process. Click here to download more information on how we might help with Buyout Solutions. Alternatively to discuss the options open to you contact Aled Edwards on 0117 968 9628, Tiziana Perrella on 0161 242 5332 or Charles Cowling on 0161 242 5388.