UK - Schemes should rationalise arrangements to cut costs and boost efficiency, before regulatory changes come into force, experts say.
They claim the changes to the industry contained within the government’s Pensions Bill and tax simplification have given firms an ideal opportunity to either amalgamate their schemes to cut costs or alter their benefit structures.
And they cite changes at pharmaceutical research giant Pfizer as a prime example of the rationalisations that can be made. Pfizer declined to give any precise details of the merger or any resultant changes, but sources say the firm has merged three of its UK-based schemes.
Pfizer’s previous pension arrangements included the £392m Pfizer Pension Scheme and the £164.3m Pfizer Pension & Life Assurance Scheme, which is composed of three sections: the 1973 WHL final salary scheme, the 1988 hybrid scheme and a defined contribution scheme.
Additionally, while Pfizer administers its final salary arrangements in-house, its DC scheme is administered by Mercer Human Resource Consulting.
Allen & Overy solicitor Dana Burstow said: “For schemes that haven’t done so yet, the changes in the industry are a good opportunity to step back and look at what kind of provision they want to make for people.
“Do they want to do it in the current form at all or completely shift the shape of the benefits? People should really bring their schemes together, rather than have lots of legacy arrangements.”
Hewitt Bacon & Woodrow principal consultant Raj Mody agreed.
“This is a good opportunity for housekeeping. Its the natural opportunity to do a review and it can lead to cost reductions, better targeting of benefits and making sure that schemes are getting a better bang for their bucks.”However, Mercer Human Resource Consulting European partner Peter Bowers was far more sceptical.
“Most schemes aren’t terribly well funded, so I’m a little surprised people think it is a good time to do it. There are certain advantages in doing so, but I suspect the majority of schemes will find it rather difficult.”
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