Corporate Financial Services
As a trust based occupational pension scheme, when first established, a trust deed is prepared which sets out the terms of the scheme and a board of trustees is appointed to maintain responsibility for scheme management, administration and investment
DB schemes (often referred to as final salary schemes) provide a known level of benefit to members based broadly upon their period of service with the employer and final pensionable salary prior to retirement. A career average definition has become commonplace rather than the traditional final salary definition in an effort to reduce scheme funding deficits.
Typically, a maximum pension equating to two-thirds of the member's pre-retirement final salary can be provided.
Most schemes are funded by regular employer and employee contributions, however the responsibility of meeting any shortfall to provide members pensions sits solely with the employer. Under this type of scheme it is therefore the employer rather than scheme member who is exposed to investment and mortality risk. This shortfall can occur as a result of poor investment performance falling annuity rates and changes in legislation.
In recent years, almost all private sector DB schemes have found themselves underfunded. This uncertainty has forced many employers to close their scheme down and switch to some form of DC scheme.
For more information on our DB scheme services, please contact us or request a call back.
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