UK - Many smaller firms are being forced to delay scheme wind-ups because they cannot afford to pay for annuity buyouts, Hazell Carr claims.
The consultant – which specialises in advising schemes with less than 500 members – said stock market falls had left many schemes with assets which cannot cover annuity buyout costs.
Hazell Carr director Kenneth Donaldson said companies in this situation should be aware that there was no “one-size-fits-all” solution and that they should consider the negative impact a scheme wind-up has on employee relations.
He explained: “These firms need to look at their position and it may well turn out that, if they can afford to ride out this market and underwrite share losses, sticking with a DB plan is the right thing.”
Alternatively, firms should consider raising member contributions rates or re-examining their investment profile to mitigate risk.
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