Archive for September 2014

David Davison

With many charities now facing full balance sheet disclosure of their multi-employer pension scheme liabilities for the very first time trying to get a handle on the potential impact can be daunting. We’ve already put together a guide for charities in these schemes which explains the technical details and the key choices charity FD’s are likely to face. In addition we’ve designed a FRS102 liability calculator which will allow organisations to enter their deficit recovery contributions and recovery period and obtain an estimate of the net present value figure they’ll be likely to have to include on their balance sheet. Based upon this the calculator will also provide a proxy figure for a full disclosure equivalent to that calculated currently derived under FRS17.

From this charities should be able to see the potential financial impact and begin to consider if steps need to be taken to protect the balance sheet position. For some the steps could be relatively straightforward however for others, particularly those where this change could have a material impact, and potentially even result in a negative balance sheet, more bespoke action could be required and planning needs to begin early to consider all the alternatives.

The calculator will allow multiple calculations to be carried out, saved and printed and we hope it will provide access to a valuable resource for charities to better understand their obligations.

Susan McFarlane

After three years of debating its future, and today’s “no” result, one thing is clear for Scotland.  The independence debate has reaffirmed that the issue of pensions is at the front and centre of UK politics.  People care deeply about pensions and are keen to ensure savings are encouraged and that the safety net of the state pension is protected.

We wait with interest for further details on the new powers that will transfer to the Scottish parliament. Even in light of the Scottish people deciding to stay in the United Kingdom, these new powers could still have a significant impact on the pensions landscape of Scotland – and the UK.  We encourage industry bodies and pensions professionals to continue to make positive contributions to future policy and debates.  This will help the gradual rebuilding of public confidence in the savings and pensions industry that has been started by the onset of automatic-enrolment and the changes announced in the 2014 budget.

2014 has been an exciting year for pensions and 2015 promises more of the same. “Freedoms”, but perhaps not in the way some in Scotland were hoping for…

Neil Copeland

Fawlty Towers. Series 1 Episode 6. Comic genius John Cleese’s finest half hour. Well, except for episode nine of the first series of Monty Python’s Flying Circus. You know. The one with the Lumberjack Song in it. And the films, obviously, but they were more than half an hour. So comic genius John Cleese’s second finest half hour, not counting the films. It was absolutely hilarious! “Don’t mention the war!”

Faulty pension scheme documents. Not funny at all.

A recent case (Honda Motor Europe Ltd and another v Powell and another (2014) highlights the risks associated with documenting amendments to pension schemes.

The first case related to the Honda Group UK Pension Scheme (the Scheme). Honda Motor Europe Ltd (HME) decided to extend membership of the Scheme to employees of Honda UK Manufacturing Ltd (HUM). The intention was that HUM’s employees would receive less generous benefits in the Scheme than those available to existing HME members. Although an announcement to this effect was made by HME to the HUM employees, the new HUM benefit scale was not formally incorporated into the Scheme’s trust deed at the time.

A deed of adherence in respect of HME was executed on 6 October 1986 with effect from 1 August 1986 which was expressed to “extend the benefits of the Scheme” to HUM’s employees. The HUM benefit scale was not formally documented until 10 December 1998. Read more »

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