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Pension strategy a priority for corporates - JLT

UK - Corporate management need to be more familiar with pension scheme investment strategy amid a "shift of power" between employers and trustees, says consulting firm Jardine Lloyd Thompson.

Consulting director Andrew Firbank said: "Compromise might have been a runner in the past but now the cards are heavily stacked in favour of the trustees. Why would they settle for less than the full buy out cost?

"A detailed understanding of the government's proposed legislation and how it will affect a business should be a top priority for all FDs finance_directors and senior pension decision makers.

"They need to be much more familiar with the implications of investment strategies, changes to the scheme design and possible plans to wind up a scheme."

The comments follow remarks last week to IPE by Nobel Prize-winning economist Robert Merton that the asset allocation of corporate pension funds has a larger than acknowledged impact on the economic value of the companies.

Ted Clack, director of bulk annuities at Prudential UK - which is co-hosting an event with JLT, said today: "Our research has shown FDs are increasingly concerned about the impact of scheme deficits on the financial strength of their companies.

"But most of the recent focus on pension schemes has been on investment risk, FDs and pension decision makers also need to turn their attention to the ongoing mortality risks associated with DB schemes."

The two companies are set to host a joint briefing in Manchester on November 15. They said the event is aimed at helping corporate finance directors and senior pension decision makers plan the best strategies to control and mitigate the risks associated with all forms of pensions provision.

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