Case Study: Defined Benefit Scheme In this case study, Thomas Carroll Independent Financial Advisers provide an example detailing how we assisted a client in reforming their defined benefit scheme. The administration and structure of the scheme was reviewed along with all current and future costs. In this example, the annual savings to the client equated to over £160,000. The case study below highlights the process undertaken by our Chartered financial advisers. Client Profile A local manufacturing firm employs 100 staff across the UK and has a gross turnover in excess of £42m. They established their defined benefit scheme in 1978. The client maintained the scheme open to accrual for current active members and closed it to new members in April 2003. In addition to the defined benefit scheme they also run a money purchase scheme for new employees and other benefits including lump sum death-in-service cover. The Need for a Solution The company first approached us in 2015 concerned with the escalating administration and running costs of the defined benefit scheme. Particular attention was paid to: company contributions paid into the scheme to maintain benefits; associated management costs including actuarial advice, administration services and levies What we did Thomas Carroll held a number of meetings with the board and their finance team to understand the defined benefit scheme in place. Our experienced team researched the market and presented a two stage solution. Stage One An alternative scheme management solution: Thomas Carroll Solution
Annual Cost Saving
Actuarial and administration support £ 50,000
£ 24,236
£25,764
Investment Fund Charges plus Consultants fees
£169,860
£119,290
£50,570
Thomas Carroll Fees
Nil
£ 8,600
(£8,600)
Total
£219,860
£152,126
£67,734
Service Description
Annual Cost
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Stage Two Changes were also made to the structure of the pension scheme to reduce the cost of annual pension contributions by ÂŁ100,000, representing a cost saving of over 40%. If you would like to discuss an alternative solution to defined benefit scheme management
Tony Smith Employee Benefits Consultant Thomas Carroll Employee Benefits t. 02920 853764 m. 07946 270030 e. tony.smith@thomas-carroll.co.uk w. www.thomascarroll.co.uk
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