solutions
Defined Benefit Optimiser
- Why not reduce the cost of running a company pension scheme?
- Why not reduce the risk?
There is no need to cut pensions to do so.
We analyse each client’s needs and their pension arrangements, then apply our innovative cost-down and de-risking toolkits. The improvements can be dramatic.
Each toolkit contains a score or so of tune-up tools: many of which are thoughtful ways to implement old ideas or completely new ideas. All are tried and tested.
These ideas were developed for defined benefit pension schemes, but many also work well for defined contribution schemes.
These are best explained using a few examples.
Smart Pension Contributions
National Insurance contributions can be reduced if employers to pay pension contributions instead of employees. This typically saves one percent of annual payroll. But for many employers the drawbacks of traditional approaches to “salary sacrifice” outweigh the benefits. Our unique focus on tax and pensions consultancy has helped us to overcome these drawbacks and implement this for many employers.
We have also developed novel ways to manage demands for unbudgeted additional employer contributions. These also help trustees to meet the Pension Regulator’s demands.
Ethical Transfers
Our approach to offering bulk enhanced transfer values typically achieves take-up rates of ten times the industry norm. This can provide large one-off cost savings and substantial de-risking without harming employees.
Smart Contracting-out
This gives much the same cost-savings as Smart Pension Contributions, but without the need to change employee payslips.
Smart Insurance
Many actuaries learn “credibility theory”, a tool which can help avoid wasting money on over-insurance. Yet this is seldom used when considering insuring death benefits or buying annuities. Since 2004 group life insurance has been reclassified as regulated investment advice. Few Actuaries are qualified and authorised to do so.
Smart investment
Pension schemes typically waste 0.5% per annum on poorly focused investment fees and consultancy charges. This typically increases the cost of the pension scheme by 15-20%.
One-off tools
Often we design specific solutions to meet a client’s particular needs.
For example one client needed to find a way to convert a whole pension scheme from defined benefit to defined contribution. We found a way to do this without harming the members. A few months later a short-sighted change in legislation unwittingly removed this option for other clients.
New tools
We develop these constantly. At the moment we are working on ways to use Ethical QROPS to help employers and employees in defined benefit pension schemes.
Ethical background
None of the tools in these toolkits is expected to harm current or former employees. Often they work by reducing the money paid to HMG or other external organisations.