Wind-up and buy-out - the cheaper option?

(Jun 18, 2014)

The words "cheap" or "cheaper" are not normally seen in the same sentence as pension scheme wind-up or buy-out.  However, my challenge is whether it is not indeed the cheaper option after taking into account the capitalised costs of running a pension scheme for another 10 or 20 years.

The risk-based Pensions Regulator (TPR) in the U.K. recently completed a survey of the costs of running a defined-benefit (DB) pension scheme.  Average costs were over £1,000 per annum per member for small schemes and only a quarter of that for the largest schemes.  The normal human reaction features words such as "horrendous", "incredible" and "never-ending".  Given the number of ex-employees involved, the typical reaction…

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Tags: buy-out, buy-in

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