Transfer Value Incentives
Pension liabilities are a material factor in the success of a business. Companies generally have some control over factors that impact the business, but this is not the case with pension liabilities. There are the trustees, the volatility of the financial markets, changes in accounting regulations, deficits, increasing longevity. All can have huge but uncontrollable impacts on the liabilities of your pension scheme.
The only real solution is to remove those liabilities. One way this can be achieved is 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.
Another very practical solution is to encourage members 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 and a member will only accept this if the "price is right". Arriving at that right price means offering members an enhancement to the values offered by the trustees. This enhancement can be paid direct to the member, after tax and NI are deducted, thus making a transfer a very attractive option for members.
Transfer values are too good to turn down, but this comes at substantial cost to the employer. Before committing to the costs of an exercise, PCS can advise companies on how much should be offered, what is the likely to cost to the company, how do we maximize take up and what are the risks to the company and trustees? PCS has developed a financial modeller that will help companies answer these questions and help lead to a meaningful reduction to the balance sheet burden.
Click here to download more information on how we might help with Transfer Values. Alternatively, to discuss the options open to you, contact Charles Cowling on 0161 242 5388 or Rob Dales on 0113 203 5883.