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Capping DB
pension costs and offering choice of DB or DC

Case studies

The background 

As a result of rising DB contribution rates, an association was faced both with a disparity between the contributions paid for different groups of employees and the strain on their business of additional pension contributions. Recognising that DB pensions were valued by employees, they proposed to cap employer DB contributions (with members paying the balance) and to offer members a choice between DB and DC. Management were concerned about the complexity of this choice and its potential impact on employee relations.

Our solution

We worked closely with management and the administrators to put together communication material to employees, explaining how the situation had arisen and what the options were. We presented alongside management across multiple sites and also provided individual face to face and telephone sessions for employees to explain their options, which were very well received by staff.

The outcome

Our client now has more stable ongoing pension costs for future pension provision and a reduction in the level of DB risk accruing after broadly two-thirds of staff opted to switch to the DC arrangement. As a result, our client is able to focus on their overriding strategy to meet the
Government’s directive to build new homes, while at the same time providing employee benefits that are as equitable as possible.

How we can help

We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.

Our social housing team has the skills and knowledge to help you consider the pensions issues affecting your organisation. 

Get in touch.

If you would like to know more about our services and how we can help you with pensions and benefits.

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