Increasingly, the valuation negotiations about funding with your pension plan’s trustees are one of the most complex transactions which your company has to tackle. In 2014 market conditions, with bond yields still so low, it’s also likely to be a very tough negotiation. The challenge is to ensure that the plan is appropriately funded, but in the way that best balances the opportunities and risks that the company is facing. That’s easier said than done!
When appointing your corporate adviser, you need to make sure that the individual’s breadth of experience and commercial acumen puts him or her at least on a par with the trustees’ scheme actuary, who is usually very senior.
At bac we only advise companies but our team has many years of experience of supporting both trustee and company boards through, sometimes complex, valuation negotiations. This means that not only can we help you develop a robust negotiation strategy but we can also give you real insight into how to get the deal done. In particular, we can help you explore the approaches which will be needed in 2014 market conditions, if the company is to avoid paying what could be a potentially crippling level of deficit contributions.
The key to a successful valuation outcome is planning and preparation in advance of the results being known, so you can approach the negotiation on the front foot. At bac we will help you:
- clarify your objectives for the valuation
- review your current funding strategy and identify alternative approaches
- understand the up-to-date funding position before the trustees give you their view of the world
- identify your bottom line position and your negotiation strategy
- put the company’s case across to the trustees in a way they and the scheme actuary will understand and which avoids unnecessary conflict.