Managing Pension Scheme Liabilities - The Options

Many Sponsoring Employers and Trustees continue to look at ways of controlling defined benefit pension scheme liabilities to reduce cost, to reduce volatility and to manage risks. For regulatory reasons it is essential to consider accrued benefits – relating to historic employment – and future benefits separately. There are a number of mechanisms at the employer's and trustee's disposal for reducing pension costs (details of which we have set out below).

Future Service Benefits

Usually it is more straightforward to reduce future benefits than past benefits but communication and negotiation with the Trustees is key. It should also be noted that the Pension Regulator actually encourages cuts in future service benefits if a scheme is becoming unaffordable.