We have the experience in scheme mergers, closures and winding up you need to reduce pension costs.
Many pension scheme sponsors and trustee bodies are seeking ways to reduce costs, particularly if they are responsible for a more traditional defined benefit (final salary) scheme and economies of scale can often be achieved by merging two or more schemes together. This is also an option if two companies merge and both have this kind of pension scheme.
Employers may feel obliged to close the scheme to future accrual, so no new benefits build up within it. Those benefits already earned still have to be funded (including any deficit which exists) but this option does cap potential costs as no new pensions liabilities continue to accrue.
Well-funded schemes can be wound up entirely and this involves securing promised benefits outside the scheme by using its funds to buy the appropriate financial products. Once this is done and the scheme has no more assets/liabilities, it will cease to exist and sponsors will be relieved of all obligations.
The processes involved in scheme mergers, closures and winding up – especially when it comes to reducing/eliminating a sponsor’s obligations to said scheme – are complex and require expert guidance to avoid falling foul of regulatory red tape and facing costly consequences.
We are experienced in advising on these issues and work with other advisors, including a scheme’s actuary and accountants, to ensure these processes run smoothly and provide the desired result.
