STRATEGY FOR THE NEW ERA

What are the issues?

There are numerous changes to pension legislation taking effect from 6 April 2006 which will impact on all pension arrangements, but particularly occupational pension schemes. Trustees will need to have a greater understanding of their responsibilities; more actuarial information will be needed for schemes. All of this is going to mean extra time will need to be spent on pensions with the corresponding escalation of management costs. Existing pension strategy should be reviewed to see if it is still appropriate, and companies should explore the alternative options available i.e. moving from a Trust based scheme to a Contract based scheme.

Why change?

One of the main reasons for changing from a Trust based scheme to a Contract based scheme is to reduce costs, make the pension provision easier to understand, and provide flexibility for employees.

Trust based

Trust based schemes (final salary and money purchase) are required to have trustees, and with the changes to pension legislation from 6 April 2006, trustees will be required to have a greater understanding of their legal responsibilities, the scheme rules and pension legislation. Although there will only be one tax regime instead of eight tax regimes under which pension schemes will operate, the demands on trustees and the need to be in regular contact with their advisers will increase, together with the breadth of service provision required to support trustees likely to increase.

Contract based

Contract based schemes are either Group Personal Pension or Stakeholder schemes which are money purchased based. They do not need trustees, they are flexible, there is usually a wide range of investment funds which will meet most investment risk profiles and the costs are explicit and fixed.

What can Regent Provide?

Regent can provide full consultancy covering final salary, money purchase Trust based and Contract based schemes, and can assist in the formulation of a pension strategy to support overall HR and personal objectives.