The collapse of BHS and concerns over the future of Tata Steel have put the sustainability of private sector defined benefit (DB) pension schemes firmly into the spotlight. These types of DB scheme promise a set payment to their members in retirement based on salary and years of service, but there are growing concerns that many such schemes and their sponsors will be unable to fulfil their promises at a time of rising life expectancy and falling interest rates.
Ince & Co Partner Jennifer Donohue has teamed up with the International Longevity Centre – UK to produce a report, ‘The End of the Beginning? Private defined benefit pensions and the new normal’. The report makes a series of policy recommendations to help businesses ensure the long-term sustainability of both DB schemes and the companies and employees funding them.
Although the majority of private sector DB schemes have closed to new members, their impact on the economy will be felt long into the future. Company executives, pension trustees and all DB stakeholders need to adapt to a society where DB scheme funds cannot provide for forty or fifty years of retirement. Recognition of this legacy issue and finding solutions is the responsibility of all stakeholders, corporates and the government. The challenge is for government, regulators and industry to create solutions that recognise the wider societal and economic challenges associated with continued DB pension deficits.
Click here to read the report.
Ince has considerable expertise in designing solutions to the issues presented by deficits, whether in helping to restructure the debt or in providing bespoke solutions at the time of sale or purchase of companies or in legal structures to manage the liability.
If you would like to know more, or have any questions about this report or any relevant issues, please contact Jennifer Donohue.