Posts by David

David Davison

David Davison

Specialist consultant on pensions strategy for corporate, public sector and not for profit employers
David Davison

In March 2015 the Department for Work & Pensions launched a call for evidence on ‘Section 75 Employer Debt in Non-Associated Multi-Employer Defined Benefit Pension Schemes’. This is a once in a generation opportunity for charities to influence government to get legislation which is seriously damaging charities financial viability. I therefore would urge charities who participate in schemes of this type to make their views known to the DWP. I’ve included  a link to an article I’ve written on Civil Society Online and our response to the Consultation which should hopefully help charities with their responses. The consultation closes on 22nd May 2015 so not much time left.

David Davison

SHPS or leaky boat?

“Déjà vu all over again” is a famous quote attributed to famous baseball manager Yogi Berra which must perfectly describe how England and Wales social housing organisations must be feeling following the publication of the results of the 2014 valuation for the Social Housing Pension Scheme (“SHPS”). The results show that the ‘on-going’ funding deficit has increased from £283m in 2005 to £663m in 2008 to £1,035m in 2011 and now £1,323m at 2014. I’ll not mention the current position which would be even worse!!

In the face of further  increased future contribution costs and further future risk exposure, organisations may now be considering what options are open to them. Read more »

David Davison

Local Government Pension Scheme (‘LGPS’) – Technical consultation on Local Government Pension Scheme Rules – December 2014

Introduction

The evolution of LGPS over the last number of years has created significant inconsistencies and unfairness particularly in the treatment of admitted bodies.  This is highly problematic for participants as well as building up significant difficulties for the LGPS themselves. It has also resulted in LGPS looking unresponsive to the issues that their admitted bodies face.

The consultation specifically requests “suggestions on how to better protect local tax-payers where there is a risk they will have to foot the bill for employers who leave the scheme.” LGPS need to recognise that the current approach is unfair, impractical and ultimately unsustainable. LGPS would appear to prefer to continue to pursue excessively prudent cessation settlements which are rarely if ever paid, as they are unaffordable, while organisations continue to accrue further liabilities which will remain unsettled until a point where an organisation ceases to operate and the burden is left with the tax-payer. Surely to protect the tax-payer it would be much more sustainable to find a way to prevent additional unaffordable liabilities accruing and adopt a more pragmatic methodology in calculating and obtaining any cessation liabilities due.

In this response I will therefore look to identify a number of the key issues faced and offer some proposals how the LGPS could adapt for the good of participants and themselves. Read more »

David Davison

With many charities now facing full balance sheet disclosure of their multi-employer pension scheme liabilities for the very first time trying to get a handle on the potential impact can be daunting. We’ve already put together a guide for charities in these schemes which explains the technical details and the key choices charity FD’s are likely to face. In addition we’ve designed a FRS102 liability calculator which will allow organisations to enter their deficit recovery contributions and recovery period and obtain an estimate of the net present value figure they’ll be likely to have to include on their balance sheet. Based upon this the calculator will also provide a proxy figure for a full disclosure equivalent to that calculated currently derived under FRS17.

From this charities should be able to see the potential financial impact and begin to consider if steps need to be taken to protect the balance sheet position. For some the steps could be relatively straightforward however for others, particularly those where this change could have a material impact, and potentially even result in a negative balance sheet, more bespoke action could be required and planning needs to begin early to consider all the alternatives.

The calculator will allow multiple calculations to be carried out, saved and printed and we hope it will provide access to a valuable resource for charities to better understand their obligations.

David Davison

I am delighted to have been able to contribute to, and indeed sponsor, the publication of “Navigating the Charity Pensions Maze” produced by Charity Finance Group (CFG). I believe that this document will provide charities with an invaluable reference guide to the complex pension issues they face.

The document was launched on 10th July 2014 in London by CFG with support from Pensions Minister, Steve Webb and also included the launch of a Pensions Manifesto which highlighted the areas of importance and makes proposals how these issues could be effectively improved or reformed.

The Maze document has taken around 6 months to compile, includes detailed research carried out by CFG and covers a wide array of topics which will hopefully allow finance directors, HR managers and CEO’s to find information on the issues which affect their charity and therefore help them get the most from their pension provision. Read more »

David Davison

When encouraging change to the approach taken with charity pensions I’m constantly asked the question by large schemes and regulators – have you got any analysis of the issues. This has often been difficult to obtain and as a result the pension difficulties charities face are often all too easily ignored. Charities really need to have their voice heard and here is your chance. Charity Finance Group are carrying out a pension survey to use to better inform on the issues faced and to assist in negotiations with DWP and LGPS for a change in legislation and approach.

This is a great opportunity for charities to influence future pension policy and thinking, and to really get their views across at a high level.

I would strongly encourage charities to participate by following the link and providing your experience.

But don’t delay as the survey closes on the 7th April.

 

David Davison

As part of the Scottish Independence debate the issues of regional life expectancy and the pensioner dependency ratio have become something of a political football.  It is certainly difficult to remember points which have previously been regarded as niche topics which academics and politicians have become quite so exercised about.

Having carried out some research, the first interesting fact is that Scottish mortality rates were not always higher than their counterparts in the rest of the UK (rUK). Up until the 1950’s, Scottish life expectancy was broadly on a par with the rest of the UK.  However, from that point, rates in Scotland improved more slowly. Whilst there is no definitive explanation, the cause has generally been attributed to increased levels of deprivation until the 1980’s. Read more »

David Davison

All organisations participating in multi-employer defined benefit pension schemes need to carefully consider how the introduction of the new Financial Reporting Standard 102 will impact upon their organisation and carefully assess what options are open to them. The new accounting requirements will see many organisations who do not currently record their defined benefit pension liabilities having to do so for the first time.  This could have a very material impact on balance sheets.

Organisations who already account for their scheme as a defined benefit scheme need to consider if the new legislation provides them with alternatives to their existing disclosures.

Alan Collins, Director and Head of the Employer Advisory practice at Spence, has compiled a Guide which analyses who the changes will affect, what the changes will mean and what steps to take in preparation for them. The Accounting disclosures under multi-employer pension schemes Guide is available to download here.

David Davison

Recognising the difficult issues posed by pensions for many charities the National Association Of Pension Funds is holding a free seminar for charities in London on Thursday 6th February 2014. The event has gathered a series of specialist speakers with expertise on pensions and the charity sector to provide attendees with in depth knowledge on the issues faced and the potential options available.

The event is designed to be highly interactive with participants being given the opportunity to ask questions and feedback views to regulators, representative bodies and specialist advisers. This is undoubtedly an event not to be missed.

More information on the event is available here: NAPF Charities Forum

David Davison

When working with charities on their pension provision I’m constantly reminded of the old joke about the man stopping and asking for directions in Ireland and being told “Well sur, if you’re trying to get there I wouldn’t be wanting to start from here!” This feeling of being a bit lost and not quite sure where to turn is an all too consistent theme.

So in terms of developing a suitable strategy for the future what should charity trustees be looking at? Read more »

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