An engineering company in Bedfordshire had a final salary pension scheme that had a major deficit. Trading conditions were not great and the prospect was that the deficit would only increase. Ultimately, the obligation to fund the scheme could force the company into liquidation.

RHG were recommended to the company by their accountants. We had numerous meetings to understand the company, its needs and objectives. We analysed the finances of the pension scheme and the demographics of the workforce. Ultimately, we reported to the company with our conclusions and recommendations.

Our view was that there was no real prospect of the company making good the deficit and that they should try and reach agreement with the workforce to cut back the benefits to facilitate winding up.

We proposed:

• A reduced benefit level to eliminate the deficit and allow winding up
• A replacement Group Personal Pension Scheme appropriately funded
• Self-Invested Pensions for the directors and employees with larger funds
• A longer term strategy to try and replace some of the lost benefit if finances permitted
• A structured communication and consultation process

This was particularly challenging as ALL staff had to agree to reduce their pension benefit to enable winding up.

Once agreed we:

• Issued an initial letter to all staff
• Undertook detailed presentations to staff
• Won the support of the union representative, which was key
• Held various group discussions to explain more detail and to consider any alternative courses of actions
• Held individual meetings with employees who were particularly opposed
• Implemented the GPP and wound up the Final Salary scheme
• Reviewed and took over all the other benefit arrangements.

Five years on, the company is thriving and the staff are loyal and committed.

If you are unsure what to do with your staff benefits, contact us now.