Dealing with a deficit & exploring alternative funding options
For many UK Defined Benefit pension schemes, an increased deficit will be an unavoidable outcome of a 2015 funding valuation. In turn, this will inevitably lead to a request from the pension scheme trustees to the sponsoring employer of the scheme for additional deficit reduction contributions.
In such circumstances, whilst any deficit will ultimately need to be met by the sponsoring employer, however the key objectives and/or priorities of the corporate may not align with making additional cash injections into the scheme. So, how can companies deal with an increased deficit in an efficient and effective way?
In our paper “Pension Scheme Valuations - Challenges and Opportunities in 2015” we highlighted the impact of falling long term Gilts yields on pension scheme valuations and 5 actions for companies to consider for their defined benefit pension schemes.
In this paper we consider the third possible action: dealing with a deficit & exploring alternative funding option.
Earlier Papers in this Series:
Pension Scheme Valuations - Challenges and Opportunities in 2015
Action 1: Reviewing the impact of your pension scheme’s Investment Strategy
Action 2: Preparing for a scheme funding valuation