The provision of pro-active actuarial consultancy advice is very important. Sometimes, it might be beneficial to retain your actuarial services from a different source than your administration/consultancy in order that the actuary can keep a check on administration matters and be an external influence on investment strategy. Indeed, on this basis the actuary is fully independent of all other activities and can be a good watchdog.
The rate of contribution a company will make to a pension plan is usually set in conjunction with the trustees based on the advice of the plan’s actuary but at the same time is very much a corporate financial decision.
The pre-funding of pension liabilities should reflect corporate philosophy and other wider financial objectives, not to mention the need to provide a sufficient level of security for the pension benefits promised to members.
Funding objectives can be set to establish a smooth long term contribution rate or alternatively with the desire to establish and maintain an agreed funding level relative to accrued liabilities.
In this area it is important to take into account the level of financing which the company can afford, the company’s cash flow requirements and whether phased contribution levels are appropriate.
It is therefore important that the actuary understands the nature of your business which has its own particular circumstances and the corporate objectives which are being set. Actuarial advice given in isolation can at times be technically correct but inappropriate as far as the needs of the company and its workforce are concerned.
We would be delighted to take the opportunity to discuss and identify the actuarial basis and funding strategy that are most relevant to your company and pension plan.
If you would like to discuss how we can help, please contact John Byrne.
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