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Funding Strategy - Meeting Liabilities
Background
The approach adopted to funding Irish defined benefit pension plans has great significance for plan trustees and company management alike. In the current economic climate companies might wish to defer cashflow into the Fund, whilst increasing investment uncertainty may result in trustees wishing to see stronger funding to improve security. An understanding of the major issues is of key importance when attempting to reconcile these sometimes conflicting demands, to find an outcome that is acceptable to all parties.
Continuous change to the regulatory framework reinforces the need to remain on top of the key issues. Also, the new accounting standard FRS17 takes a prescriptive and potentially volatile approach to accounting for pensions, and this will bring greater attention from shareholders and analysts on Company pension arrangements.
Key issues:
- How much money should be paid into your plan in future, and when?
- How sensitive is your plan’s funding level to major movements in investment markets?
- Is your funding strategy more or less cautious than the norm for your peer group?
- How will the new accounting standard affect the Company, and consequently how might it affect the trustees?
- What are the implications if your scheme is closed to new entrants?
- What is your funding level measured against the fund standard?
- If your plan was wound up would there be sufficient assets to secure all the benefits promised?
- How close is your funding level to the maximum permitted by the Inland Revenue?
What we can do to assist you:
- We can advise on the cash flow implications of adopting alternative funding methods for meeting your liabilities
- We can measure your funding level against the funding standard and advise on corrective action if necessary
- We can advise on how your funding strategy compares with the norm for your peer group
- We can analyse the current and possible future development of the key balance sheet and profit and loss items under FRS17
- We can measure your funding level against the funding standard and advise on
corrective action if necessary
- We can assess whether your plan would have sufficient assets to secure all benefits provided if it was wound up.
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