A new actuarial approach is required for closed defined benefit schemes because the approach used for open schemes is not suitable, say pensions professionals.
A poll of employers, pension managers and trustees by Lane Clark & Peacock showed concerns that the full buyout requirement on wind up announced on June 11 means pensions professionals must treat pension liabilities with extreme care.
LCP says schemes should adopt a cash flow based investment strategy that adjusts in response to how the member profile of a closed scheme alters over time.
LCP partner David Jones says: “Before the announcements of June 11 it was important to manage pension risks – now it has become essential. For closed schemes the new risks need to be clearly understood by both trustees and employers.”