It is a good time for LCP to launch a report that praises our corporate pensions. Yesterday we learned that an American Company has pulled a £4.6bn corporate pension plan in favour of an American assisted buy-in from L&G.
Today’s report is timely and as always from LCP – elegant. It is a 14 page power point that says what LCP and others have said before- it should be read.
Something of a call to action to LCP’s Corporate Clients and to employers who may be losing heart after losing another great pension scheme to abroad.
I am very glad we have LCP, I remind myself I kind of worked there myself when I ran their Channel Island offices! But that was 20 years ago and we are in a different world.
Here is the report from LCP for you to download or read from the page. It doesn’t take long and as you choke over further downgrades in Britain’s productivity, bigger problems for number 11 , please remember that we still have an economic miracle in workplace pensions.
It could be a great miracle as it was, if we make the most of the opportunities we have today and tomorrow.
If you don’t want to open the slide share, read LCP’s blurb – oh and come to the Pension PlayPen coffee morning at 10.30am today.
The report from the consultancy said opportunities from schemes’ endgame journeys and high funding levels can benefit corporations, if schemes overcome data, trustee and policy challenges.
It added new surplus sharing rules can allow sponsors to “unlock long-term value” with higher returns, noting those targeting higher risk and those that have dealt with downside risk through hedging can benefit.
In addition, surplus usage decisions should take into account covenant strength, funding needs, trustee opinions and strategy for schemes, as well as tax, governance, accounting and reputation, as well as legal duties under the Companies Act for sponsors considering mergers and acquisitions.
Schemes should also understand who owns surpluses within accounting, while being aware of tax, accounting and scheme rules, and utilising early auditor engagement.
Updated mortality modelling and new medical information should also affect decision-making, with sponsors needing to “reassess assumptions that directly affect liabilities, funding levels and endgame strategy”.
LCP partner and head of corporate consulting Gordon Watchorn said: “Defined benefit pensions are bright stars in a dark sky for corporate Britain, and sponsors who act now to align strategy, governance and accounting will be best placed to turn pension surpluses into long-term corporate value.”
Partner Phil Cuddeford added: “In a landscape transformed by stronger funding and new freedoms, sponsors have the chance not just to respond – but to lead. By driving the conversation, they can shape pension strategies to reflect their objectives, unlock long-term business success and create better options for members.”
Agreed
Link to the Pension PlayPen coffee morning at 10.30am is here
