Those responsible for managing pension schemes are faced with an increasing number of financial and operational challenges in the day-to-day running of their schemes. The difficult economic environment of recent years, increased focus from the Pensions Authority, plus the continued management of pension scheme deficits, have heightened the need for holistic financial management planning. We work with clients through all stages of this financial management planning to ensure the best outcome for all parties.
At Willis Towers Watson we have extensive experience of providing the solutions companies and trustees need to ensure comprehensive pension scheme management and governance. We also assist in developing suitable journey plans, bringing together longer-term funding and investment plans for your defined benefit (DB) Scheme.
There are several options available to help manage risk in DB pension schemes. At one end of the spectrum there is the journey towards a wind-up of the pension scheme and securing all member benefits. One of the intermediate steps towards achieving this goal is the purchase of annuities to match some or all of the pensioner liabilities.
What are the advantages of a bulk annuity purchase?
Annuities can remove all of the risks associated with pensioner liabilities including:
- Longevity risk (i.e. the risk of members living longer than expected)
- Interest rate risk
- Inflation risk.
Eliminating these risks provides greater cost certainty for sponsors and trustees and can reduce the administration costs of running the scheme.
However, any decision to purchase an annuity must take account of the impact on the long-term cost of providing scheme benefits and a feasibility study should be carried out to assess this impact.
How can Willis Towers Watson help?
Willis Towers Watson has considerable experience and expertise in advising clients on annuity purchase. Our specialists combine a blend of actuarial, broking and project management skills.
This range of skills means that we can cover all aspects of an annuity deal, providing guidance on deal structure, assessing financial impact, negotiating terms with providers and also ensuring that the project is delivered efficiently, meeting all of your expectations.
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