Liability Reduction Strategies

Rights built up in pension schemes are protected under law and cannot be removed once accrued. However, different members have different fundamental needs and Final Salary schemes do not always offer the greatest flexibility to meet these needs.

For example, single members may have no need for the extensive spouse’s pension benefits usually available. Instead they may value the freedom to chose the format of their benefits and select a higher pension with no spouse’s benefits.

Equally certain members may not value non-statutory pension increases and would prefer higher initial pension.

It is possible for employers acting in a transparent and moral manner to offer benefit or transfer value enhancements to allow members greater choice and at the same time reduce the liabilities in their Scheme. This will not suit all members and enough information must be provided to allow members the opportunity to make an informed decision. In order to run this sort of exercise correctly good quality actuarial advice and excellent communications are needed.

For further information on the potential to reduce liabilities please contact your local First Actuarial office.