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.
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
Spence & Partners Head of Charity & Not for Profit advisory services David Davison was set the challenging task of presenting a session entitled “Pensions Made Simple” at the 22nd annual Charity Accountants Conference held in Birmingham on the 19-20 September 2013. The talk covered defined benefit and defined contribution schemes, private and public sector schemes and provided the audience with an overview of the issues charities face and the potential solutions available to them. The talk was well received by the audience and slides are available here : The Charity Accountants’ Conference – Pensions Made Simple
David Davison contributes to an article outlining the issues affecting public sector defined benefit pension schemes. Read more.
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 »
The winding up of People Can, which provided homelessness support services on behalf of several English local authorities, has shocked the voluntary sector and led it’s former Chief Executive, Maff Potts, to issue an impassioned plea for change . There is a concern that the People Can scenario could be replicated across the sector with hundreds of organisations being driven in to administration by their pension liabilities.
This is an issue I’ve raised consistently over the last number of years and have made some comments on the potential impact in an article by Patrick Butler in the Guardian.
Finance Directors of charities not disclosing their multi-employer pension liabilities on their balance sheet may be sleeping just a little uncomfortably at the moment following a consultation document issued by the Financial Reporting Council.
If the proposals are accepted charities will need to recognise any agreement to fund a deficit in a multi-employer scheme on their balance sheet. Read more »
The problems 3rd Sector employers are facing with their defined benefit pension schemes it would seem are at last getting the attention they deserve and momentum for change is building.
Read more »
As charities face continuing issues with their defined benefit pension provision I’d viewed the consultation on the Section 75 regulations with some degree of optimism in the hope that there might at last be a recognition that unconnected organisations participating in multi-employer schemes might at last be viewed as a special case. Indeed pensions minister Steve Webb responded to some of my comments in a recent Pensions Week article by referring to the consultation.
Unfortunately the focus of the consultation is very much on connected organisations and centred around the impact of corporate activity and misses the specific issues faced by third sector employers entirely. Schemes are being forced to operate with one hand tied behind their backs and participants offered less flexibility than would be the case if they had their own scheme leading them to make decisions which are undoubtedly against their long terms financial interests.
Our full response to the consultation can be found here and it is to be hoped that the scope of the consultation can be widened and this inconsistency dealt with.
Professional Pensions reported my concerns about the promotion of defined benefit schemes to 3rd sector employers and my view that any such promotion which failed to ensure that the employer fully understood the attendant risks and uncertainties, was irresponsible and totally inappropriate. This elicited some interesting responses and I wanted to thank everyone for their comments on this important issue. There did seem to be a bit of confusion however, which I wanted to clear up.
My comments are clearly focused on DB provision in the third sector. Stephen Nichols, the Chief Executive of the Pensions Trust, was given a 2 page platform and a video to share his views on “Saving DB” and I thought it completely fair and balanced of PP to carry an alternative view and I thank them for that. Other senior staff within TPT have espoused similar views recently around DB so it wasn’t unreasonable to assume it was something of a ‘house view.’ The Trust is a highly regarded and respected organisation marketing primarily defined benefit pension scheme services to third sector employers and I was concerned that some of these employers may accept such a suggestion as being right for them and I wanted to ensure that they were totally aware of the risks involved.
In my experience of advising 3rd sector organisations they are ill-equipped to deal with defined benefit pension arrangements and certainly with ‘multi-employer’ DB arrangements where there is a supplementary risk that the strong will be required to pay for the weak as well as for themselves. The funding position of TPT schemes is not unique, you only have to consider schemes like PNPF and MNOPF to name but two, but their target market is. One respondent accused me of having a binary view and perhaps I do – DB Schemes should be left to organisations who can afford the contributions now and in the future and can deal with the volatility of liabilities and costs. Is anyone seriously contesting that view? Read more »