Sacker & Partners solicitors specialising in pensions law

Most employers are exploring the options for providing pensions for their employees and are looking beyond the realms of the traditional Final Salary pension scheme. Many reasons are cited for change, which include:

affordability - given recent stock market performance, increased longevity and the ever-increasing regulatory and legislative burdens;
flexibility - employees tend to be more mobile and less inclined to stay with an employer for “the long haul” with the result that employers are adapting pension provision to suit their business needs in the light of the remuneration package as a whole;
predictability - with alternative types of scheme (Defined Contribution being just one example) employers are better able to forecast (and control) their business costs going forward.

As well as looking at the option for change, Sacker & Partners Schemes In Transition Unit (SITU) also looks at the reasons for change and considers issues like funding, how to manage deficits and what the trustees role is in the bigger picture of change.

What are the options?

For an employer seeking change, the options are numerous and vary considerably between:

maintaining the status quo;
“fine-tuning” benefit provision for example by altering selected benefits going forward for existing members and/or for new employees but without making sweeping changes;
embarking on more significant changes by changing the nature of the scheme’s benefit structure entirely.

The third option raises a whole raft of possibilities such as switching to a Defined Contribution scheme or seeking an alternative Defined Benefit arrangement. For example, career average schemes are defined benefit arrangements but break the link with “final pensionable salary” as benefits are effectively calculated annually (by reference to pensionable salary in that year) and then revalued to retirement. A cash balance scheme splits the defined benefit risk because, although benefits accumulate on a Final Salary basis, at retirement benefits are secured by the purchase of an annuity outside the scheme.

How can SITU help?

SITU was formed specifically to assist clients who are either contemplating change or are in the process of changing their schemes as well as the "big picture" issues of what prompts change. The Unit co-ordinates and continues to develop Sacker & Partners already significant expertise in this area. Whatever changes you have in mind, Sacker & Partners can help complete a smooth transition by:

exploring the pensions options with you;
advising on the applicable pensions law and regulatory provisions;
interpreting existing scheme provisions;
assisting you to communicate changes effectively with your employees;
providing all formal documents needed to give effect to the change(s) in a legal but easy-to-read format;
naturally, this includes advising on the "big picture" legal issues like funding and advising trustees on their duties and responsibilities in this context.

As scheme change encompasses such a wide diversity of issues, SITU works closely with other Sacker & Partners units including the Investment Unit and Employment Unit.

Our structure allows us to respond to any client requirement to achieve effective results.

If you would like to explore the various options for providing pension benefits to your members, please contact Janet Brown or Helen Ball on 020 7329 6699.