UK - Towers Perrin HR Services has launched a new Corporate Pensions Solutions consultancy service, to reflect the "growing demand" of companies for innovative advice separate from the compliance-driven advice received by the trustees.
The creation of Corporate Pensions Solutions will now bring together a group of specialist consultants and actuaries who can support companies in all aspects of corporate pension management.
“Defined benefit (DB) pension plan financing is increasingly causing conflicts of interest between trustees and companies because deficits and untenable ongoing costs are threatening the sponsoring company,” said Mark Duke (pictured), who will head the Corporate Pensions Solutions group.
“Company executives will need independent third-party advice to help them protect shareholder interests and implement pension solutions that fully support the company’s objectives,” Duke added.
The 2004 Pensions Act and recent proclamations from the UK Pensions Regulator mean that the era of trustee and plan-sponsor conversations about funding and investment being brokered by the trustees’ advisors is coming to an end.
Towers Perrin now believes that companies will face more assertive trustees who have to take a pro-active approach to ensuring pension fund assets cover liabilities.
In particular, the regulator and trustees will be checking the solvency of pension funds in relation to the credit worthiness of the sponsor.
Demands from trustees concerning pension plan solvency have already led to high-profile transactions being abandoned. Trustees may insist on full plan solvency before agreeing to corporate acquisitions, dividend payments or share buy-back programmes
Duke added: “Companies need to take the lead in negotiations with trustees. Only by setting out the company’s position very clearly up front are the trustees and company likely to reach a working consensus. Relying on the trustees’ advisors to come up with a corporate-friendly solution is extremely dangerous.”
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