Case Study 1: Winding Up a Defined Benefit Scheme

Our client wanted to consider all options with regards to their Defined Benefit scheme.

One Pension Consultancy was engaged to present a Report on the options available to the Company. Following that Report, it was decided to Wind-Up the scheme and we were asked to:

• Undertake negotiations with the Actuary and pension provider.
• Explore all aspects needing attention prior to Wind-Up, including pension equalisation issues, benefit design, Trust deed and Rule amendments and so on.
• Deal with the administration of the Wind Up process, including data cleansing, placing of Notices and so on.
• Undertake a communication exercise with the active members, deferred members and pensioners.
• Recommend and establish a new defined contribution scheme.
• Communicate with The Pension Regulator as appropriate.

In this instance, we were able to identify a benefit improvement for all members that significantly reduced the cost of purchasing deferred annuities. We also explored the provision of enhanced transfer values versus deferred annuities for members, and ultimately purchased a bulk deferred annuity policy for the remaining members, meeting the client’s objectives of capping their liability whilst meeting their obligations as scheme sponsor and retaining the goodwill of the members.