Alex Whitley shares his six top reasons on why financial directors shouldn’t wait to define and implement their pension strategy for 2017.
Read the first in this three part blog series.
As an employer, pension obligations and commitments can represent a material cost, risk and time commitment for your organisation – and they normally have no direct link with your core business activity.
Having a clear and workable strategy and principles for managing your pension schemes is therefore essential for ensuring that pension surprises don’t adversely impact on what you are trying to achieve within your wider company growth. If you don’t have these, then you probably need them.
The level of detail you choose to have within your pension strategy and principles is likely to depend on how material pension obligations are within your organisation, and the degree to which you like to retain flexibility as opposed to having strict parameters to work to.
However, in nearly all cases having clearly defined pension objectives and viewpoints which key individuals in your organisation are happy to work within should quickly pay off. Here are my six top reasons for why you should start to define and implement a pension strategy today.
- You’ll demonstrate a clear plan of action to your board and shareholders, and you’ll be able to confidently answer questions on why you are (or aren’t) taking action on pension matters as economic and regulatory markets change.
- You’ll also be able to explain why you are (or aren’t) doing the same as key competitors when it comes to your pension arrangements.
- You’ll quickly benefit from relevant innovations in the pension industry, as you’ll have defined principles for what you’re trying to achieve.
- You’ll have a clear process in place for making decisions when pension opportunities arise (including who makes the final decisions, and whose budget is available for pension projects).
- You’ll boost the relationship with your pension scheme trustees by being open about what parameters you’re working to (meaning initiatives can quickly be acted on, or discounted, depending on where they fit within your pre-agreed principles and objectives).
- Ultimately, you’ll proactively improve your pension position and reduce costs and risks when appropriate opportunities arise.
Setting a structure and deciding objectives for managing your pension commitments doesn’t need to be overly time-consuming or complex. Follow our pension strategy guide which provides you with the building blocks you need to define and implement your pension strategy.