UK - Watson Wyatt has warned companies not to take a defensive approach to the legislative detail relating to the new Pension Protection Fund and new changes to actuarial standards.
Stephen Rees, a partner in the benefits practice at Watson Wyatt, said: “There is no need for companies to adopt a passive role in the light of the new requirements, indeed they should use the information as a vital learning tool.”
He added: “Companies have often tried to play down the financial position of their pension schemes in the event of their pension schemes in the event of their termination.
“They have been worried that this information might frighten employees, however, this can create huge surprises in the cases that do go into winding-up. Worse, it can lead employees to think that their pensions are guaranteed.”
Watson Wyatt says better explaining how benefits work could foster a more open environment.
Rees said business could benefit from the “reality check” by assessing where they are now and how they would manage a potential wind-up.
“If the company takes control of this message, then it has a better chance of explaining that absolute security is never possible,” he said.
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