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Defined Benefit Services

Trustees ‒ Defined Benefit Services

Given the increased regulatory focus placed upon scheme funding by the Pensions Regulator, the provision of high quality, yet pragmatic actuarial consultancy advice, has never been more important.

Our actuaries and consultancy teams are experienced in the complexities of scheme funding negotiations involving trustees, employers and when required, the Pensions Regulator. We place an emphasis upon a collaborative approach to funding negotiations, taking time to understand the objectives and constraints of all parties. In this way we are able to deliver our advice in an efficient and cost effective manner.

We provide a full range of actuarial consultancy services which includes:

  • Advice in respect of changes in legislation;
  • Triennial valuations;
  • Annual funding updates;
  • Actuarial factor reviews;
  • Transfer insufficiency reports;
  • Benefit design and augmentation.

Liability management

There are risks for every assumption used in the funding valuation because in reality assumed value is an estimate only. There may be a need for higher-than-anticipated contributions if:

  • Members live longer than expected;
  • Inflation is above the assumed rate and not offset by higher investment return;
  • Pension increases in payment and/or deferred pensioner revaluation is at a higher rate than assume;
  • Members exercise benefit options – for example on cash commutation or early/late retirement – in a way that leads to benefits higher than those assumed in the valuation.

There are other associated risks, including:

  • Sponsor risk – that the employer will be willing and able to continue sponsoring the scheme and meet any deficits;
  • Data risk – a cornerstone of any actuarial valuation is the data on which it is based. If this is wrong or incomplete then the valuation may be compromised;
  • Legislative risk – that new legislation could change benefits that paid to members or the way benefits are funded;
  • Investment-related risks – for example, assets under-performing the investment return objective.

Our trustee de-risking consultancy service sets out a standard range of standard risk mitigation options as well as more challenging ideas, based on current themes and availability in the marketplace. We have helped many clients to de-risk over the years, by providing such services as:

  • Data cleansing exercises
  • Buy-Ins and Buy-Outs
  • Formulation of investment strategy
  • Insuring pensioner liabilities
  • Insuring deferred pensioner liabilities
  • Enhanced transfer value exercises
  • Pension increase exercises
  • Promoting early retirement options
  • Alternative financing
  • Longevity Swaps

We work with you to help you better understand the options available to you to reduce the risks of your scheme (financial or otherwise). In our experience, there is a balance to be found between reducing risk and maintaining an affordable cost for the employer and trustees. We aim to educate trustees so that you are informed and can feel confident in what we can achieve.