Case study - delivering solutions to a client with multiple pension schemes
Background
Our client is an international company with a diverse product portfolio in adhesives, household cleaners, body care products, and products for surface treatment and industrial cleaning.
This client has been a Buck Consultants client for over 30 years and is highly active in buying and selling businesses. After a short but very intense period of such activity, the UK company was faced with six separate pension schemes. The scheme structures were:
In addition, the client decided to offer a new DC arrangement for new hires from April 2003. From an employee relations perspective, the client did not wish to change the promises for existing members at this time, except where entry to the new DC scheme represented better value. The arrangements had a variety of different advisers, administrators, investment managers and insurers. Buck Consultants identified a number of synergies and leveraging opportunities that could be achieved by pulling together the operational aspects of the arrangements.
Objective
As a result of Buck Consultants’ proposals, the client established a committee to oversee the achievement of the following objectives:
-
for new hires a single, modernised scheme design within the client’s policy parameters
-
improved cost-efficiency by optimising/standardising advisory and administration support services
-
meeting employee needs within company cost constraints
-
facilitating the cost-effective integration of acquisitions/sales
Approach
Buck Consultants was appointed as the preferred provider of support services for all the schemes and to manage the project. A project plan was proposed and agreed with the client; it identified a structured process for achieving the objectives.
The client and the trustees of each scheme agreed the following (where it is legally possible, meets the Trustees’ objectives and does not create conflicts of interest, nor denies the scheme of key knowledge):
-
provide the benefits under a single trust with sub-sections for each scheme
-
appoint Buck Consultants and utilise the same auditors, insurers and investment managers
-
appoint similar company representatives on the trustee bodies
-
manage the trusteeship requirements to achieve economies of scale (e.g. a common day for trustees meetings).
Results
All the objectives are being met, resulting in significant savings in management time and operational costs.
The process was not without its challenges. These included Buck Consultants identifying, as part of the transfer of data, very poor quality data and maladministration issues found with the work undertaken by the previous advisers. The trustees were disappointed to learn this but delighted it had been identified sooner rather than later, as the maladministration was ongoing.
All provisions are being consolidated under a single trust. There are two schemes yet to complete this process; they will do so once the legal advisers have confirmed their agreement.
A careful communication exercise has been undertaken to assure members that the changes would not affect the security of their benefit promises.
For more information, visit our Retirement services section.
