City Research Online

Abstract

The report highlights the acute pressure faced by many private-sector defined benefit schemes and their trustees as they strive to meet their long-term liabilities. It predicts that the businesses of hundreds of employers will become insolvent well before the end of their recovery plans, under which the trustees and sponsor agree contributions to make good the deficit over an agreed number of years. On insolvency, these schemes may have insufficient funds to pay members’ pensions in full. The report argues that this worst-case scenario can be averted if the approach to managing pensions changes to one that is prepared for many more schemes to pay less than full benefits on a planned and co-ordinated basis, with all parties in agreement on how best this is achieved. Freeing an employer from the burden of its pension fund, whilst avoiding insolvency, can create extra value which can be shared with the members to achieve a better outcome.

Publication Type:	Monograph (Technical Report)
Additional Information:	All rights reserved. Short sections of text, not exceeding two paragraphs, may be quoted without prior permission provided acknowledgement is given to the source. Otherwise, no part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means electrical, mechanical, photocopying, or recording, without the prior permission of the copyright holders.
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School > Finance

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