Pioneered forward thinking on final salary pension scheme
...and massively reduced future financial risk.
The Challenge
Correctly analysed in the late 1990’s that trends in the factors affecting costs of final salary schemes would lead to an inability to fully manage the financial risks associated with operating such schemes in future years. All of these factors were genuinely beyond the Company’s control. The Company could not afford a “do nothing” strategy in this area. The Solution
Achieve, through the appropriate negotiation and consultation, agreement to a closure of the final salary pension schemes. Design appropriate replacement pensions and benefits schemes to ensure that Company remains competitive in recruiting and retaining. Ensure that the company’s risk to future funding liabilities of expensive pension schemes is minimised and that future pension arrangements are affordable. The Result
Successfully devised, planned and implemented closure of final salary pension schemes with zero IR trauma (750 members over four sites). Timely execution avoided complexities brought in by subsequent legislation.
Stabilised security of existing pension scheme members’ accrued benefits as a result of discontinuing the future build up of a potentially unfundable obligation.
Designed and implemented replacement pensions and benefits schemes. This involved a significant amount of measured formal and informal communication; including consulting with three different trade unions and negotiations with two sets of trustees.
“…a major impact on performance going forward…the right action at the right time…” – Principal shareholder
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