Finance and Accountancy Briefing

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FD survey: The management and impact of defined benefit pension schemes


The volatility of the financial markets over the past decade increased longevity and the introduction of new regulations has impacted pension schemes. But how have these issues impacted the businesses that sponsor these schemes for their employees?

To find out more, Capita Fiduciary Group and Financial Director magazine conducted research in July among 219 finance directors from the head offices of UK quoted companies.

Key findings include:
• The cost of providing a defined benefit pension scheme has risen dramatically in the past 10 years, leading to the closure of many schemes.
• The survey revealed that 86% of companies with a defined benefit pension scheme have suffered from an ever-increasing impact, especially on their finances.
• The reality is that many companies with legacy closed defined benefit schemes are having their strategic planning options strangled by the impact of the pension scheme requiring more injections of company funds.
• Indeed, as one finance director noted on his scheme, “the impact is obscene, leading to a lower D&B rating and higher PPF levies".

The survey also revealed that finance directors believe a professional trustee brings tangible benefits to the trustee board. The findings indicate the three positive effects of a professional trustee as being:
• Wider knowledge of issues facing a trustee board;
• Better quality decisions; and
• A more effective trustee board.

Capita concludes the report by suggesting recommendations for how finance directors can successfully manage their pension schemes.

Capita Fiduciary Group would like to thank all the respondents to the questionnaire for their time and feedback.

For a look at the full report, please download a copy here now.

Tags: Pensions.

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