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Scheme funding negotiations

Legislation and the Pensions Regulator require occupational pension schemes to be prudently funded to protect members’ benefits, but this stipulation has serious implications.

Determining suitable contribution levels that do not jeopardise the future stability of your firm is a delicate process, but Punter Southall’s experience in employer consulting can assist in setting realistic expectations for all parties.

Our scheme funding advice service offers the following elements:

• Agreeing a timetable with trustees which provides suitable opportunity for consultation and participation by the sponsor
• Independently reviewing the scheme actuary’s advice to trustees, to make clear the value of margins contained in the proposed assumptions
• Assisting with negotiations with the trustees regarding the Statement of Funding Principles, Schedule of Contributions and Recovery Plan, either as part of a full valuation or as part of a review of your financial obligations and cash flow needs
• Helping prepare and present ‘employer covenant’ information for trustees by ensuring it reflects the company’s prospects and current position
• Composing ‘affordability statements’ which explain affordable deficit contributions consistent with the Pension Regulator’s guidance
• Responding to formal covenant reviews, with an emphasis on maintaining the long-term viability of the sponsoring employer in keeping with the time horizons relevant to pension schemes
• Analysing life expectancy assumptions. Significant differences in average life expectancy occur between schemes; our analysis compares your specific fund to a ‘typical’ scheme, providing a better understanding of the true cost of your pension obligation 
  
  More information about our suite of mortality assumption tools
• Financial modelling of the scheme’s future cash requirements, showing sensitivities to market movements and the impact on your business.

By avoiding unproductive actuarial debates or blind alleys which incur time and cost, our scheme funding advice service focuses on achieving a realistic negotiated agreement.

View our Scheme Funding Advice case study, which demonstrates how we respond robustly when trustees or advisers make wholly unrealistic demands and work to ensure a funding schedule that suits both sides.

For further information contact Danny Vassiliades by email or on 020 7839 8600.