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Understanding PensionsPensions services for employers, trustees and individuals
Managing any kind of pension scheme today is a complex task and one that needs expert guidance. Grant Thornton can offer a wide range of expert pension services to employers, trustees and individuals. We pride ourselves in finding innovative, cost-effective and commercial solutions to the problems they face.
We help the trustees and sponsors of defined benefit (DB) pension schemes to evaluate the risks and costs of running their scheme and help them manage the key relationships with trustees, employees and the Pensions Regulator.
While most of the industry’s attention has been focused on managing final salary schemes, the future of employer pension provision is defined contribution (DC) and we recognise the importance of the role it will play in the workplace of the future.
Pensions can be equally confusing for high-net worth individuals, with an enormous number of complex and confusing options. We provide a personal service to determine a course with the aim of providing the best benefit.
For companies and trustees, our services include scheme design, actuarial consulting, pensions assurance, accounting, covenant assessment, as well as investment, de-risking and tax advice. For individuals, we provide clarity and bespoke solutions. For all our clients, we aim to help run their pension schemes more efficiently while minimising costs.
We look forward to talking to you about how we can use our understanding of pensions to help you.
Employer
Individual Advice
Taxation
IndividualCovenant Review
Scheme De-risking
InvestmentConsulting
International Consulting
Individual Advice
Taxation Services
Actuarial Consulting
Trustee
Covenant Review
Scheme De-risking
InvestmentConsulting
Audit & Assurance Services
Benefit Design
Defined Contribution Consulting
Actuarial Consulting
The Pensions Regulator and common sense suggest that having an independent review of the strength of a scheme’s employer covenant is a good idea.
It can assist trustees with their fiduciary responsibilities and help them understand the ability of the employer to support the scheme and the impact of corporate transactions, such as when the employer is refinanced or bought or sold. Pension schemes are now such an important part of a company’s obligations that any significant change could have an impact on the strength of the covenant.
Each scheme is unique and so too is its sponsoring employer. We carry out a detailed individual analysis to deliver an accurate assessment of the scheme’s covenant. This gives a clear picture of the financial strength of sponsoring employer and its ability to cover any deficit, either now or in the future. We have considerable experience advising both
the trustees and the employers of schemes with every size of funding deficit. We also have particular experience advising on the impact a restructuring, re-financing, sale or acquisition will have on the scheme.
We have strong working relationships with both the Pensions Regulator and the Pension Protection Fund, allowing us to provide clients with a clear insight into the regulatory regime. We helped the Pensions Regulator to design and operate its scheme funding and clearance guidance.
We are collaborative in approach and are conscious of the importance of maintaining the vital relationship between the employer and the trustees. There is no such thing as a one size fits all approach in pensions and our service and advice are tailored to suit the scheme and employer circumstance.
Covenant Assessment
Outsourced Scheme Accounting
Governance & Risk
Management
Asset Tracing& Fraud
Pension Investment ConsultingWe can provide trustees and employers with the knowledge, tools and support to set a pension scheme investment strategy that delivers broad investment objectives, based on an ability to evaluate the detailed structural outcomes of the various options available.
Our Investment Consulting and Financial Planning teams give pension investment advice to pension scheme trustees and individuals.
Our comprehensive service offers:• arobustinvestmentprocessthatmanagesriskandcosts• asset-liabilitymodellingoftheeffectofvolatilitiesin
inflation, bond yields and equities • advisingonformulatingandreviewingStatementsof
Investment Principles• advicetailoredtoeachclient’sspecificcircumstancesand
requirements• independent,exceptionalvaluewhole-of-marketadvice
Actuarial ConsultingEmployers face an enormous challenge in evaluating all of the risks and costs involved in running a pension scheme. Increasingly they are turning to their own advisers, independent of those appointed by the trustees, who can challenge the existing assumptions but still work effectively with their scheme trustees.
Grant Thornton’s actuarial team has considerable experience advising employers on pensions, particularly issues relating to DB pension schemes. Our actuarial background gives us a deep understanding of the funding and valuation of pension schemes, which can be critical when advising on the impact of a benefit change or a liability management programme, or in a transaction situation.
We provide all the services that would be expected from a leading consultancy including:• preparingorreviewingthenecessaryaccountingdisclosures• assessingtheliabilitiesforaccountingpurposes• providingduediligenceinthecaseoftransactions• reviewing a scheme’s liabilities and impact on future cash flows
We pride ourselves in simplifying complex problems and providing workable solutions. We help organisations to manage their DB pension scheme and its risk more efficiently.
Pension Scheme De-riskingThe proliferation of deficits in DB pension schemes under allvaluationbases-accounting,SchemeSpecificFundingand full buy-out - mean that investment strategy decisions need to be sharper and smarter. Furthermore, the need for real-time and mark-to-market valuations means that the investment strategy needs to be more detailed and granular in its approach. Getting the strategy right and monitoring its performance in detail is critical for both good governance and meeting scheme funding objectives.
Pension scheme buyouts, buy-ins and longevity hedging have become an important aspect of managing pension risk. Our team advises on solutions that fit client requirements and don’t force a single approach. Our experience as a result of our banking, insurance and actuarial background gives our team a solid understanding of the market and they know when a strategy is appropriate and when it is merely overly complex.
We advise on the most innovative solutions in the market including:• Liabilitydriveninvestmentstrategies• Longevityswaps• Standardpensionbuy-ins,deferredpremiumpensionbuy-
ins and collateralised pensioner buy-ins• Buy-outandfullliabilitysettlement• Designandimplementationofflightpath-basedde-risking• Enhancedtransfervaluesandpensionincreaseexchange
exercises• Earlyretirementexercises
We understand how important a consideration cost is for a pension scheme and we negotiate hard with providers to get the best deal within the risk appetite and budget of the trustee and employer.
Pension AssuranceWhilst the majority of schemes have a statutory requirement for an audit of their Annual Report and Accounts, an investment in a high quality specialist audit can deliver significant value in supporting the trustees’ governance of the scheme. A Grant Thornton audit is much more than just minimum compliance.
Our trustee-centric risk-based approach to statutory audit results in effective two-way communication with the trustees. This collaborative style, combined with our extensive sector experience, ensures that the specific issues that concern the trustees are addressed, as are the key areas in the sector as a whole, via a fully tailored audit bespoke to their scheme.
Our commitment to utilise only specialist pensions audit teams, and a higher proportion of senior staff time designated to the audit, not only results in a very smooth and efficient audit process, but also provides value added observations on best practice to scheme management, in order to aid the continuous improvement of processes and procedures.
Our position as a leading firm in developing the IDEA data interrogation software, and the strength and breadth of our in-house specialist teams, ensures that we deliver a highly innovative, effective and targeted audit service. We provide the trustees with the additional assurance they need, in meeting ever more challenging governance standards, in a cost effective seamless manner.
Our other audit and assurance services include: • benefitcalculationreperformance• extendedtestingofinternalcontrols• independentvaluationofcomplexinvestments• benchmarkingagainstarelevantpeergroupofsimilarschemes• auditingtransitionsbetweeninvestmentmanagers/custodians• timelinessandaccuracyofcontributions• internalaudit• AAF01/06,AAF02/07andISAE3402reportingon
internal controls• trusteetraining
Outsourced Scheme AccountingWhilst many schemes have the Annual Report and Accounts prepared by their third party administrators, an increasing number are seeking a more cost-effective method, by employing specialist pension scheme accountants like Grant Thornton. As thought leaders in the sector, and the author of‘PensionSchemes:AnIndustryAccountingandAuditingGuide’, we are well-versed in both the mandatory and evolving best practice disclosures within scheme Annual Reports.
We can also offer a fully outsourced accounting service for larger schemes that require regular management accounts and detailed investment accounting processing throughout the year, as well as the production of the year end statutory Annual Report and Accounts.
Governance and Risk ManagementThe standards of trustee governance expected by the Pensions Regulator, and the corporate standards imposed by sponsoring employers, are increasing to ever higher levels. Grant Thornton has significant experience of a wide range of UK schemes and can help trustees initially to assess, and then continually to improve, their governance processes and procedures. This is achieved by working in partnership with the trustees and their other core advisers, via facilitated discussions and workshops, together with benchmarking againstrelevantpeerschemes.Sessionsoftenconsiderspecificareas such as fraud risk, the review of the scheme risk register, or an overview of trustee governance processes.
As schemes continue to change and evolve, so does the environment in which they operate. As a result risk registers and other governance processes must also remain under regular review. They must be working documents, not a large consultancy report gathering dust on a shelf. The Grant Thornton approach results in an easy-to-digest action plan and risk register that can become standing agenda items for trustees, to be reviewed regularly and updated as needed.
Taxation ServicesWe provide pensions tax advice to businesses and individuals, combining technical expertise, a commercial approach, industry understanding and exceptional client service and delivery.
Direct tax Our tax capabilities include assistance with• thedesignandlaunchofinvestmentfunds• dealingwithmulti-jurisdictionalandhighvaluewithholdingtaxreclaimsforbothinvestmentandpensionfunds
• monitoringtheimpactoftheEuropeanCourtofJusticeand otherlegaldecisionsforinvestmentfundandpensionfundclients
• structuringinvestmentsinthemosttax-efficientmanner,especially involving alternative asset classes
• taxcomplianceforanyentitieswithinyourpensiongrouprequiring such services
VAT Weadvisefundsinvestinginpropertyandcomplexinvestment vehicles on how to optimise their VAT position, withanapproachthatensuresthatclientsareawareofcurrentandfuturelegislativechangessothattheycantakeaproactiveapproachtotheirVATaccounting.Ourworkincludes monitoring VAT recovery methodologies to ensure that what they are using is the most appropriate and that theytakeintoaccountanychangesinthestructureoftheinvestmentportfolio.
Global Compliance and Outsourcing ServicesWeofferasinglepointofcontactforallcomplianceobligationsandtransparencyoverthestatusoftheserviceatanytime.Weworkcloselywithyourin-houseandoutsourced delivery teams, using rigorous review processes, documentationandservicedeliveryofthehighestquality.
Asset Tracing and Recovery in Pension Scheme FraudTheriskoffraudishigherduringaneconomicdownturnand pension schemes are not immune. Schemes are vulnerable to abuse by individuals either operating on their own or in collusion with the scheme’s advisers, yet companiespayfarmoreattentiontotheirfinancialaccountsduringdifficulttimesandaremorelikelytouncoverfraud.GrantThorntonhasarangeofexpertsincludingforensic,
insolvency,taxandpensionprofessionals.Overthelastthreeyears,wehaverecoveredmorethan£300mofassets,includingasignificantproportionthathadbeentransferredoverseasandwheretheperpetratorhadvanishedintohard-to-accessjurisdictions.Wehavewideexperienceactingforall UK prosecuting authorities and government departments, suchastheSeriousFraudOffice,FinancialServicesAuthorityandHMRevenueandCustoms.
Individual Pensions Advice for Entrepreneurs and IndividualsItisnotalwaysappreciatedjusthowcomplexabusinesspensionscanbeforhigh-networthindividualsandbusinessowner-operators.Inrecentyearshighchargesandpoorunderlyinginvestmentperformancehavetarnishedtheperceptionofpensionschemes,causingmanyindividualstoshyawayfromthem.Thejargonandmystiquesurroundingpensionsshroud
theirhugebenefits.Theyareaverytaxefficientinvestmentwrapper,whichcaninsomecasesprovideover50%reliefoncontributionsofupto£200,000.Suchagiftfromthegovernment should not be ignored, especially in today’s tight economictimes.Weunderstandallofthepotentialbenefitsandcanprovidebespokeadviceto help individuals to determine which particular pension scheme aims to provide themwiththebestbenefit in a clear and understandable manner.
Our team can provide advice in agreeing the right investmentstrategyforeachindividual’sriskappetitetoensurethatthetaxbenefitsofapensioncanbemaximised.Pensionschemescanalsobeusedinconjunctionwithanindividual’s business, so a commercial property purchase can be owned by a pension scheme or another investment vehicle torealisethefullvaluepriortothesaleofthecompany.
Employee BenefitsTheintroductionofauto-enrolmentandtheNationalEmploymentSavingsTrust(NEST)hasgalvanisedemployersintofocusingonthefuture.Notonlydocompaniesneedtoprovidepensionsfornewauto-enrolmentmembers,butthePensions Regulator has recently reminded scheme sponsors oftheirdutytoprovidethebestpossibleretirementfor their members.
This should encourage companies to conduct a root and branchreviewofthebenefitstheyoffertheiremployees,andwhilepensionsarethelargestpartofacompany’sbenefitspackage,thereviewshouldnotonlybelimitedtopensionprovision,itshouldalsoincludeallbenefits,toensurethattheymeshtogetherinanintelligentfashion.GrantThorntonoffersadvicetoemployersonthemost
effectivebenefitsstructure,ensuringschemesareuptodate,reflectcurrentlegislationandaretaxefficientandvalueformoney.
Our services include:• designandimplementationofpensionschemes• guidancewithpensionsauto-enrolmentrequirements• reviewingexistingpensionschemearrangementsandbenefitstructures
• structuringGroupRiskandHealthcareinsurances• recommendingFlexibleBenefitsandSalaryExchange
arrangements• providingindividualinvestmentadviceandguidance• adviceoninternationalbenefitsstructures
Wehaveanationalteamofspecialists,dedicatedtoprovidingthebestlevelofadvice.Ouradvisersareauthorisedtogivefinancialadvice,whichmeansthatwecanadviseemployeesontheirpensionsdecisionsratherthanjustoutlinetheiroptions. We listen to the business challenges that our clients faceandthenworkwiththemtodeliverpragmaticsolutionsin line with their business goals and values.
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© 2012 Grant Thornton UK LLP. All rights reserved.
‘Grant Thornton’ means Grant Thornton UK LLP, a limited liability partnership.
Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to ‘Grant Thornton’ are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients.
This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.
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Covenant Assessment Darren MasonPartner T +44 (0)20 7728 2433E [email protected]
Keith HindsPartner T +44 (0)20 7865 2716E [email protected]
Pension Scheme De-risking Kelvin WilsonAssociate Director T +44 (0)20 7865 2402E [email protected]
Investment Consulting Peter LoughridgeDirectorT +44 (0)28 9031 6523E [email protected]
Pension Assurance & GovernanceFiona BaldwinDirectorT +44 (0)161 953 6461E [email protected] Neil KnightsDirectorT +44 (0)20 7865 2873E [email protected]
Actuarial Consulting Paul CookDirectorT +44 (0)20 7728 3070E [email protected] Asset Tracing Nick WoodPartner T +44 (0)20 7728 2426 E [email protected]
Taxation Dana WardPartnerT +44 (0)20 7728 3316E [email protected]
Employee Benefits Ian HartnellDirectorT +44 (0)20 7728 3018E [email protected]
Matthew BeamanSenior ManagerT +44 (0)121 232 5363E [email protected]
Individual Pensions Advice Neil MessengerPartner T +44 (0)7966 446397 E [email protected]
Richard WheatleyPartnerM +44 (0)7968 324695E [email protected]
