Are you an employer running a defined benefit Scheme?
If you are the Finance Director of a company where you are still running a defined benefit scheme, you will no doubt have been through many sleepless nights. Defined benefit schemes which started out life as being the panacea for retirement planning. Thee schemes offered the employee the security of a known benefit at retirement and because of good investment returns were not costly for employers. It is difficult to believe believe that these schemes were once is surplus. Now Defined Benefit Schemes have become a black hole for the employer into which more and more money has to be poured and the Pension Protection Fund levy just keeps increasing.
Nicholls Stevens have been actively involved in advising employers on the options available to them in order to reduce the liabilities in these schemes. Some schemes have reduced accrual rates, increased employee contributions, changed the definition of pensionable salary, restricting new entry and ceasing future accrual of benefits and finally introducing less expensive Defined contribution arrangements for all or part of the staff.
However, even after these changes have been made, there is still the cost of running the final salary scheme which can eat into the returns.
Nicholls Stevens have been advising employers on the administration and strategy for their pension schemes for over 25 years. We specialise in the small to medium size scheme where we feel we can add most value. Because we are a small firm ourselves, we can keep our charges competitive but can offer you and your employees a first class service
Our administration service covers all the normal aspects but in addition we offer a workplace financial advice service for your employees. We arrange regular surgeries where the staff can obtain advice on their pension arrangements and other financial matters.
Are you a member of a Defined Benefit Scheme?
If you are a member of a defined benefit scheme, also known as a final salary scheme you have the” best of the best” as far as pension provision is concerned.
Your scheme is funded by your employer and he must continue to invest money in the scheme to insure that the benefits he has promised will be paid out. At your normal retirement age you will receive a known pension based on your years in the scheme and your pensionable salary close to retirement. So what can go wrong?
At Nicholls Stevens we are called upon by employees who find themselves in schemes where the employer can no longer afford to maintain the level of these high benefits. The employee often has to make choices as to what to do in order to secure future retirement benefits. This is where our expert advice can be invaluable
Other employees approach us to help them make those very important decisions they must make at retirement age: whether to take tax free cash or maximum pension or even take a transfer in order that access can be made to a larger cash sum or the drawdown facility
There is a myriad of decisions to be made and these can only really be made if you take advice from an adviser who considers your whole financial situation. Each client’s circumstances are different, in some cases it may be important to insure that the surviving partner is financially protected, in other cases, the client is in poor health or not married and having access to cash is more important. These are decisions where you need help from an experienced retirement planner.
From time to time Nicholls Stevens are asked to comment on the option of transferring out of a final salary scheme. Carole Nicholls is authorised to give advice on pension transfers. In many situations it is not advisable to move from a final salary scheme but a full review needs to be put into place and the decision made in the context of the client’s needs
Defined benefit schemes are complex, we guarantee that we have the expertise, but also that we will do our best to explain your options to you in a simple and straightforward manner