Scheme Funding

Trustees are required to agree their valuation assumptions and recovery plan with the employer and may often feel under a degree of pressure from their advisers and the Pensions Regulator to set assumptions conservatively and implement short recovery plans.

When looking solely from the short term interest of the pension scheme members this is to be applauded but the longer term interests of members require there to be a robust employer in place to fund the scheme and there are other stakeholders including shareholders, employees (who may not all be pension scheme members), customers, suppliers and providers of finance.

Independent scrutiny and advice on the assumptions put forward by trustees or, more often than not, by their advisers can be very beneficial to employers in understanding the scope there is for variation and in reaching an appropriate agreement with scheme trustees.

Engaging an independent adviser like Spence & Partners can also often bring to light other funding options as an alternative to cash such as the use of cross guarantees from group companies or owners, and/or contingent assets.