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Actuaries warned on sponsor covenant assessment

Actuaries must make formal checks of sponsoring emp- loyers when advising on pension scheme funding, warns The Actuarial Profession.

In a report commissioned by the Profession’s Pensions Board and published by its sponsor covenant working party, TAP says the first step in giving actuarial advice should be to determine whether or not the sponsoring company is a viable ongo- ing entity once full account is taken of any pension scheme deficit.

Models for actuarial funding advice need to be exten- ded to address the sponsor covenant consistently with the other key risks relating to pension schemes.

The report shows how third-party assessment of the sponsor covenant will help trustees understand and communicate the extent to which their scheme members can rely on their pension.

The move comes after a number of high-profile cases where companies have been unable to honour the financial commitments they made to their employees.

TAP says the ongoing via- bility of an employer can no longer be automatically assumed by trustees and their actuary to be a fore- gone conclusion.

The report was discussed last week by 150 actuaries and guests from the Department for Work and Pensions, The Pensions Regulator and the Pensions Protection Fund.

Pensions Board chairman Wendy Beaver says: “Actua- ries need to consider how they will allow for sponsor covenant risk in their advice. This report sets out a clear road map for how they can achieve this.”


New Star to launch pan-European equity fund

New Star International is launching its New Star pan-European equity fund in response to investor’s high demand for high alpha funds.The fund is subject to regulatory approval, but is set to launch between November 28 and December 9, 2005.It will be a sub-fund of Dublin-based New Star Global Investments Funds.The aim will be to generate […]

Epoq sets up online will deal for brokers

Law firm Epoq is offering an internet-based will-writing service for brokers and fin- ancial advisers. The firm claims that the service will enable advisers to purchase an outsourced will service at wholesale rates, which can then be marked up to clients to maximise profits. Broker Wills will also provide various tools online, such as marketing […]

Common law

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The facts on contracting out

The ABI and Aifa have published a revised version of their contracting-out factsheet, designed to help consumers decide whether to remain contracted-out of the state second pension.

CGT entrepreneurs' relief

Entrepreneurs’ relief is due, subject to meeting certain conditions, in respect of capital gains arising on ‘material disposals of business assets’. These ‘business assets’ include: Read more


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