QCG

Changing from a DB to a DC scheme

The Project

The client is a well established property company which had over many years provided final salary pension benefits for its employees. Like many other schemes of its type it had become a volatile and costly burden upon the organisation with a requirement both for high employer contributions and for substantial deficit repayments

Our Role

QCG was asked to facilitate and project manage the change process over a period of about a year. This required coordination of many strands of activity with multiple stakeholders – consultation and negotiation with DB plan trustees, consultation with management, staff and their representatives, the coordination of legal, actuarial and pensions advisers throughout the process, and the procurement of group personal pension plan and related insurance providers.

Outcome

This proved to be an extremely challenging assignment, one throughout which we and our client have learned a lot. The programme was completed on schedule albeit employee relations were significantly bruised during the process. The Board had sanctioned the design of a replacement DC arrangement that was undoubtedly top quartile practice. However the fact that this was still a significant diminution of benefit for the majority of members, at a time when the organisation was severely challenged for operational reasons, created morale problems at all organisational levels. The damage, however, has largely been limited and the organisation has now been able to move forward into the future with confidence that a major part of its cost structure is less volatile.