Your scheme financing will determine the pace and the time period over which you fund pension liabilities. Every scheme is different and we can help you make the right decisions, based on the constantly evolving interplay between:
We’ve worked with pension schemes of all shapes and sizes, using our award-winning technology to help them develop financing strategies tailored to their individual needs. And because PwC also works with thousands of leading businesses, we bring a deep-rooted knowledge of corporate strategy to this process; we can help map out a scheme financing journey in the best interests of trustees, sponsor and member alike.
We’ll find the right option for your organisation as it seeks to finance past liabilities, deal with ongoing costs and plan for future benefits promises.
The cash contributions the sponsor will make to the scheme must be agreed between the sponsor and the trustees as part of the funding valuation. We can help you achieve a successful funding valuation through:
Our 2019 pension scheme funding survey which has been running for more than 10 years, looks at the funding position and valuation assumptions adopted by UK defined benefit (DB) pension schemes. The 2019 update covers responses from 245 schemes covering over £250bn of liabilities. Our analysis brings out a number of key themes which reflect the challenges facing schemes and the actions they are taking to respond.
We’ll also work with you to establish whether there are opportunities for non-cash scheme financing. Asset-backed contributions can be used to finance past liabilities as an alternative to putting cash into the pension scheme, replacing part or all of the existing schedule of contributions with the income and security of a company asset. The potential benefits include:
To date, pension schemes have implemented more than 60 asset-backed contribution transactions involving assets worth approximately £10bn.
All eligible UK defined benefit pension schemes must pay PPF levies. The size of the levy is determined by an “Experian score” that depends on the profile of the scheme and the risk that its members might in future have to claim compensation from the PPF. We can help you to manage this cost by developing or improving systems to monitor and improve this score.
We’ve worked with many pension schemes to help sponsors and trustees collaborate on managing their PPF levies, drawing on our breadth of knowledge from legal and covenant advice to actuarial input.
Other scheme expenses relating to past liabilities can be significant if not monitored. We’ll help you assess whether scheme expenses are included in any cash contributions agreed as part of the funding valuation and ensure that both the sponsor and trustees understand the treatment. Tackling VAT leakage may be one option for reducing cost, for example.
Senior Manager, PwC United Kingdom
Tel: +44 (0)7483 416349
Scheme Financing Actuary, PwC United Kingdom
Tel: +44(0)7768 051416