Charity Employer Services

Expert Solutions for managing DB and multi-employer schemes

Strategies for stability, cost reduction, and future planning

DB schemes tend to be slightly lower funded in the charity sector than other sectors.  Charities are mindful of diverting too much of their income into their DB scheme, in case this adversely impacts donations and fundraising.  Stability of pension costs and contributions is important.

Running DB schemes efficiently is therefore critical.  Looking forwards, as funding levels improve, it’s possible that some charities may be able to start considering their DB scheme as an asset rather than a liability, and set up mechanisms to access surplus back from their DB schemes.

Key areas of DB scheme advice for charities


Negotiating with the pension scheme trustees on funding and investment strategy, usually as part of triennial valuation discussions.


Providing a governance review, assessing ways to reduce cost and simplify the governance of the DB scheme.


Advising on DB endgame options (buy-out, run-off, consolidator) and the journey plan to achieve the endgame.


Benefits and risks of multi-employer schemes

Charities often participate in multi-employer pension schemes that are common in the sector.  These include the Local Government Pension Schemes (LGPS), schemes run by The Pensions Trust (TPT) and the Universities Superannuation Scheme (USS).  But there is a wide range of other multi-employer schemes out there, including for faith-based organisations, other schemes in the broader university and education sectors, schemes in the maritime sector and some professional services arrangements.

Multi-employer schemes bring the benefit of economies of scale and lower running costs to participating employers.  But conversely, they usually also come with “last man standing risk” whereby the remaining employers have to underwrite the liabilities of employers that have left the scheme.

This risk can be a key concern for charities, as it leaves open the possibility of a small charity having to underwrite a very large pension scheme if other participating employers exit the scheme.

Key areas of multi-employer advice for charities

Actuarial Support

Support at triennial actuarial valuations, negotiating cash contributions and recovery plans with the schemes.

Strategic Implementation

Advice and implementation of strategic options, including exiting via payment of exit debts (or receipt of exit credits in some cases now), apportioning liabilities to another employer, or bulk transfer of assets and liabilities to another arrangement.

Pension Reviews

Broader reviews of pension arrangements for employees, and implementing new pension arrangements when exiting multi-employer schemes.

Exit opportunities

With funding levels improving, more charities are looking at leaving these schemes now.  In some schemes exit costs are now nil, or in the case of LGPS it’s even possible to get back exit credits from the fund.

An exit is also an opportunity for charities to review their broader pensions offering for employees.  In some cases, charities use the DC section of a multi-employer scheme to prevent their “Section 75” exit debt triggering, meaning changing DC provider is challenging.

But if a charity decides to exit anyway, then this opens up the whole DC market, and the opportunity to potentially move to a new DC arrangement with lower charges and / or an improved member experience.

Read our latest research

Sector insights

The Spence charity and not-for-profit practice has worked with 100s of sector organisations, giving us a deep insight into pensions issues and priorities in the sector.

Spence provide straightforward, cost effective advice, utilising this depth of experience.

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