The volume of activity impacting the pensions landscape has been unprecedented in recent years and will reverberate across corporate UK for years to come.
Consider the roll call: the introduction of the Pension Protection Fund and its levy; the influence of the Pensions Regulator on funding and M&A transactions; radical changes in tax treatment for individuals as well as corporates; trends towards defined contribution and flexible benefit strategies.
At Deloitte we work with our clients to develop their pensions strategy – advising them on how to finance and stabilise their pension schemes, what benefits they should provide and how to operate their pension schemes. We work with corporates to provide complete solutions to complex pensions problems. In our experience there is no ‘one-size-fits-all’ approach. Yet there is one absolute: for businesses to remain competitive and financially strong, pensions issues will need to be managed as effectively as any other business risk.
In the new landscape, pension liabilities are now viewed as company liabilities and so pension risks are increasingly being seen as a key business risk. Broadly speaking, there are three primary issues to consider:
While there is no single, clear-cut answer to these challenges, it is vital that a company understands as much as possible the various opportunities and threats currently in play. Companies need a pension strategy aligned to their commercial and HR objectives that brings certainty and stability through effective deficit management, adequate future funding, efficient operation and the management of employee expectations. A successful solution will depend on many factors. They include the company’s structure, risk appetite, tax position and commercial prospects, as well as the size of its deficit and the attitude of the trustees.