UK - Financial directors must plan ahead to control the risks associated with all forms of pension provision, experts warn.
Consultant Jardine Lloyd Thompson, insurance giant Prudential, law firm Eversheds and Independent Trustee Services met to highlight the risks associated with the shift in power between employers and trustees.
JLT said many companies were deciding whether to buy their way out of scheme deficits, or influence trustees to adopt an investment strategy to alleviate the problem.
ITS managing director Chris Martin said that while compromise may have been a “runner” in the past, the cards were now heavily stacked in favour of trustees and they were unlikely to settle for anything less than full buyout costs.
JLT Financial Consultants managing director Graham Cooke said financial directors were still unsure of the best options and needed to understand that the government’s proposed changes to the pensions tax regime would have “far reaching consequences”.
He said: “A detailed understanding of the proposed Pensions Bill and tax simplification legislation and the effects it will have on a business should be a top priority for all FDs. They need to be much more familiar with the implications of investment strategies, changes to the scheme design and possible plans to wind up a scheme.”
Prudential has launched a new range of solutions within its Defined Benefit Risk Management Plan, which have been designed to provide employers with an efficient way of managing risks.
A follow-up seminar is scheduled in London for July 28, which will look at the options available to employers looking to either buy or invest their way out of defined benefit liabilities. For details, contact Amanda Parker at JLT on 020 7895 7820.
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Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point