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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25 September 2020

In the news this week, the CMI asks for industry views on how to allow for 2020’s mortality experience, the DWP launches a small pots working group, the autumn Budget is abandoned but the Chancellor announces new measures to help businesses, the Barclays scheme subscribes to a Barclays bond and there is another repeat buy-in.

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