David Davison, a Director at Spence & Partners, independent actuaries and consultants, has called for a rational debate as to how companies which wish to better manage their final salary pension liabilities engage with their current and former employees.
Said Davison, “There has been a huge amount of hype over recent months, almost wholly negative, about the practice of employers topping up final salary scheme transfer values to allow members to exercise a real choice in relation to their pension benefits. There is scope for a more considered and balanced assessment of the issues.
“Guidance for companies and trustees in this area would be welcome. The Pensions Regulator should be encouraged to consider issuing a Code of Practice in accordance with its powers under the Pensions Act 2004.”
According to Davison, it is reasonable to assume that, if employers attempt to offload final salary pension liabilities using poor value transfers or without providing access to independent financial advice to ensure that members are in a position to make an informed choice, then the criticism seen to date may well be justified.
However, where members are given fair transfer values and access to high quality independent financial advice to allow them to choose the most suitable option for them, there is little reason why employers, trustees, individual members or even the Pensions Regulator would have concerns about the process.
“When this issue is properly and openly addressed and communicated, the potential for a win/win situation is significant,” said Davison.
For further information please contact
David Davison on tel 0141 331 1004
Issued on behalf of Spence & Partners by Blueprint Media tel 0141 353 1515
Date November 2006