Our mission at PTL for Defined Benefit pension schemes is “to secure the members’ benefits as soon as possible at the least cost to the sponsor” – but what does this actually mean?
The purpose of a mission statement is to give a direction of travel to the governance of the pension scheme. It is an aspiration to be used to constantly guide trustees as they exercise their responsibilities.
“Secure the members benefits” does not have to mean buying out the benefits. At a collective level it describes a state where the trustees are satisfied that they have mitigated risks as far as possible – this could include buy out. Securing could include a scheme being self sufficient. At an individual level benefits are secure if they have been paid in full, whatever the mechanism for delivery: a refund of contributions, full commutation or the payment of a CETV would all qualify.
“As soon as possible” means exactly that. There is no benefit to member or sponsor in delaying the securing of benefits. There is, however, an implicit acknowledgement that other factors (for example, lack of funding) may slow the process down.
“At the least cost to the sponsor”– Why would the strategy have any other objective? This implies not only the lowest benefit cost but also the lowest process cost.
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