Momentum Conference 2012: Review of Workshop A3: Dented Daimlers and Droopy Daffodils

Nigel gave a talk about an interesting “no names” case, in which he was brought in to act as an independent trustee. This related to the pension arrangements of a long established family company, which was a major employer in the town where it was based. It was a highly seasonal business, relying on Christmas turnover to finance a large upcoming employer contribution.

It became apparent that the employer would be unable to meet its commitments and a new Schedule of Contributions was needed urgently. Nigel was brought in as an independent trustee, and a new “emergency” Schedule was agreed.

A series of changes were needed; new advisers were appointed, members were asked to voluntarily agree to a reduction in benefits and a legal review was ordered which uncovered poor administration and benefit augmentations which had not been properly recorded. An unusual aspect of this case is that the majority of members agreed to a benefit reduction, even those who were deferred or pensioner members. This was a result of the community’s desire to see this important local employer survive and continue to trade.

Following negotiations with the employer over funding, the pension scheme bought a building off the employer, effectively buying the business. Ultimately the actions only bought the scheme time and it fell into the PPF.

Rod, the Scheme Actuary, outlined some of the lessons learnt along the way. Although here were many to come from this complex and entertaining case, the main one (which we would all do well to remember) is that the members are the most important people and that honest, open communication with them is key.