A financially viable employer operating a business as a going-concern that needs to attract and employ satisfied staff to carry out its functions and develop the business must consider pensions (potentially going beyond auto-enrolment obligations). Pensions are an employment cost and the employer needs to consider its all-in employment costs in establishing a viable business model, and changing that model as circumstances require, in the context of the (changing) employment market in which it operates. The employer will almost certainly have various financing constraints in running its business – in the short term, the medium term, and the long term – of which demands for scheme funding is an element.
The interests of the scheme trustees and the scheme actuary are limited, and short term so far as responsibility for their decisions are concerned, and largely formulaic. They do not look at the long-term in the same way that the employer must. The employer always needs to manage and adjust its business model with a view to the long term. But the employer must also decide to what extent it should monitor the short-term position including challenging the scheme trustees and scheme actuary.
The need for independent actuarial advice for the employer should be apparent from what is said above.
Our service includes:
- Support to the company specifically on assumptions relating to the current contribution rates by the employer. We would look to provide a detailed report on the validity of the rate used and whether the actual contribution rates are consistent to the membership profile of the employer
- Support to the company on developing strategic options for the scheme. We can bring in information about available options but the essential requirement is to build advice to the employer that is relevant to the decisions that they can take and that requires a holistic approach that we can provide. Our modelling expertise allows us to provide complete information on the trajectory of interest and inflation rates used to value pension liabilities.
Valuation and risk services
We employ actuaries and other financial risk management experts to assist in the modelling of financial risks. We adopt industry standard pricing and risk methodologies using benchmark tools to assist clients in their decision making.
As financial experts, we also provide independent and confidential financial product valuation services to business clients (and their professional advisors) to satisfy statutory, accounting and regulatory requirements or for internal risk management purposes. Congruent has developed pricing and risk frameworks to handle both vanilla and complex financial product asset classes.
Business customers who need standard (rather than bespoke) valuation services should refer to our Congruent Calculations™ service for more information.