Liability management

Actuarial advice

Liability management exercises, such as enhanced transfer values (ETV) for deferred members and pension increase exchange (PIE) for pensioners, have become increasingly common in recent years. However, a badly designed or implemented exercise will put your company at risk of financial loss, regulatory censure or reputational damage.

Of typically even more interest to employers is the possible introduction of new retirement options, for active or deferred members when they reach retirement. Usually these include giving retiring members a PIE option and, sometimes, an option to transfer their benefits out of the scheme.

At bac, having helped a range of companies look at ETV, PIE and retirement options, we recognise that these exercises can be of value to some but not all companies. That’s why we help companies to test their feasibility for their own circumstances at a reasonable and fixed cost.

If you decide to move ahead and implement a liability management exercise or some new retirement options, we can help you there too.

We have recently designed and implemented a PIE at retirement option for a FTSE 100 client. The project involved agreeing the following with the trustees:

  • the design of the PIE offer
  • the member communications
  • a bespoke online modeller for members, which compares a member’s benefits before and after the PIE offer.

We also supported the company to ensure the scheme’s administrators correctly implemented the new offer within the administration systems and procedures.

For a multinational client, we proposed a complete overhaul of the communications with members as they approach retirement, ensuring details of a member’s transfer value were made available. Additionally, we provided members with an online modeller to compare their scheme benefits with potential income levels if they were to take a transfer value.

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For a cost-effective and successful liability management exercise you need experienced project management, a well thought through offering and a strong member communication plan

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21 February 2020

In the news this week, the long-awaited tax guidance on some GMP equalisation issues is published, BAE Systems agrees to contribute £1 billion to its main DB scheme and PACE completes a second buy-in.

Survey of company actions

Over the autumn of 2019, BAC conducted an extensive survey of the actions which companies are taking to manage their defined benefit (DB) and defined contribution (DC) pension arrangements.

Pensions Arena January 2020

2019 marked 50 years since Neil Armstrong walked on the moon and this was obviously on the Queen’s mind in her Christmas message as she talked about a bumpy year but one with small steps of progress as well. In terms of pensions, it also felt like a year of small steps and occasional bumps. In this quarter’s Arena, we take a positive look back at 2019, as well as looking forward to some expected pension developments over 2020.

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