A Dynamic Approach to Corporate Pensions Disclosures Value added corporate pensions consulting
A dynamic approach to corporate pensions disclosures At Punter Southall, we have always recognised the need to provide our clients with a timely and efficient service when it comes to accounting for pensions. In times of volatile markets, continuing improvements in life expectancy and ever-changing accounting standards, it is even more important for sponsors to keep an eye on the pension scheme balance sheet and profit and loss account whilst, at the same time, ensuring adviser costs involved in the accounting process are kept to a minimum. In response to this, Punter Southall has developed a comprehensive accounting service, combining our corporate consulting capabilities with PFaroe, the award-winning pension liability and risk management software, helping us transform the way we provide pensions accounting advice to our clients. PFaroe is a real-time, web-based platform which allows fast, in-depth and accurate analysis of the key components of the pension costs disclosed in the financial statements. Accessible from your own PC, PFaroe can help make the key components of pensions disclosures less of a surprise when it gets to the year end which, overall, will help manage expectations internally and ease decision-making when it matters most. 1 A Dynamic Approach to Corporate Pensions Disclosures
Revitalising the process of accounting for pensions annually or more frequently For our clients we can offer a corporate accounting services package which includes the following: Timely and tailored advice on the accounting assumptions Benchmarking of key assumptions against those used by FTSE 350 companies The ability to flex the accounting assumptions at the touch of a button and answer questions such as what if the discount rate was 0.5% lower? Preparation of the accounting disclosures and the notes to the accounts Simplification and consolidation of the process for employers with multiple schemes with different advisers Regular monitoring of your accounting balance sheet and profit and loss items using PFaroe via your own PC An illustration of how the new IAS19 changes will affect your balance sheet and profit and loss account A Dynamic Approach to Corporate Pensions Disclosures 2
Timely and tailored assumptions advice At the financial year end, when timescales are tight, it is essential for sponsors to understand the implications of using alternative assumptions and the impact this will have on the balance sheet and profit and loss account. We can help you model the impact of different accounting assumptions via PFaroe s what if tool throughout the year, enabling you to agree the parameters for setting the assumptions in advance of the year end. This will help you make quicker decisions within the tight timescales often given for the completion of the accounting disclosures. Using PFaroe s what if analysis, you can answer questions such as what if the discount rate was 0.5% lower? and what if the life expectancy was 1 year longer?. This unique functionality within PFaroe also allows us to demonstrate the effect of using a term dependent or yield curve approach to your accounting valuation; all at the click of a button avoiding the costs and delays often involved with requesting this information from your advisers. 3 A Dynamic Approach to Corporate Pensions Disclosures
Benchmarking the key assumptions It is important for sponsors to understand where their key assumptions lie within the range adopted by other companies in their industry. Through many years of research, our dedicated accounting team at Punter Southall have built up a database of market statistics and information on the assumptions used by FTSE 100 and FTSE 350 companies. We can use this data to analyse and benchmark your proposed assumptions against the range used in both your sector and for the entire index at various accounting dates, helping you make better and more informed decisions about your assumptions. Benchmarking tool Compares adopted assumptions with those collected from the published accounts of the FTSE 100 and FTSE 350 at the same date. We then couple this quantitative evidence with our in-depth market knowledge to keep our clients at the forefront of any changes to market practice both in the UK and overseas. Within a world of ever-changing and increasingly complex accounting standards, we consider that our research and expertise will keep you informed on all aspects of the accounting process. A Dynamic Approach to Corporate Pensions Disclosures 4
Preparation of disclosures for your accounts Once the assumptions have been agreed, your Punter Southall team will be able to provide full draft disclosures tailored to your own requirements within your required timescale. We understand that it is vital to obtain the information quickly, and we are used to working to short deadlines. Using PFaroe, we can provide estimates of the profit and loss items for your next accounting period, making planning in advance quicker and easier. We can also help you with more specialised areas such as disclosing the remuneration of directors, consolidation of the disclosures for several group pension schemes, or with discussions surrounding cross border accounting requirements. One of the areas where many of our clients currently require assistance is with the illustration of their disclosures under the changes to IAS 19 which will be adopted by companies from 2013. It is important for directors to understand the potential future impact of the changes and we can help companies manage the transition. 5 A Dynamic Approach to Corporate Pensions Disclosures
Ongoing monitoring and progression of your funding level Once the year-end accounting exercise has been completed, we can help you keep an eye on your accounting position and the impact that changing market conditions can have on the key accounting items. Again, by having access to PFaroe on your own PC, you will be able to monitor this information on a monthly or quarterly basis, as well as the progress of the funding level on other bases (such as the Technical Provisions or solvency basis), thus avoiding unexpected surprises at the year end, particularly in times of extreme market volatility. PFaroe User-friendly funding and risk information and analytics. Direct access via a secure internet link accessible from your desktop or laptop at any time of day. Monitor your funding position on different measures on a monthly basis. A Dynamic Approach to Corporate Pensions Disclosures 6
Case study Company X had three defined benefit schemes, each with a different actuarial adviser who prepared the accounting disclosures for their own scheme. Company X also employed their own corporate actuarial advisers who provided advice on the assumptions and consolidated the final results for reporting purposes. With four advisers involved, pulling together the required information within the necessarily tight reporting timescales was regularly a logistical nightmare. Company X also liked to have clear visibility of their accounting position on an ongoing basis but was conscious that the provision of this information incurred additional adviser fees and was often out of date before it was received. Our solution As independent actuaries, Punter Southall were able to provide a consolidated service which involved us providing the necessary advice around the assumptions as well as the accounting disclosures for all three schemes and the required consolidation note, all within the necessary timescales. Using PFaroe, Company X had access to accurate valuation results within a day or so of year end which could be accessed on their own PCs. The Financial Controller was also able to test the appropriateness of the assumptions using PFaroe s What If in response to auditor queries and monitor the progression of the accounting balance sheet and profit and loss position on a monthly basis, all at no additional expense. 7 A Dynamic Approach to Corporate Pensions Disclosures
Punter Southall and PFaroe What do you think? I love having the real-time data and the what-ifs. It will help Trustees access the information to make better decisions. Scenario planning will be very helpful. Finance Director Very good, intuitive and can see the benefits for Corporate and Trustee boards. UK Pensions Manager PFaroe gives you clearer sight of where you stand and more timely data you need for making decisions on de-risking. Benefits Manager Everyone can have a common set of facts, the same information bank. It means Trustees can get advice from consultants on how to solve the problem not what the problem might be. As a journalist of 40 years standing not many things impress me, this does. Anthony Hilton, Business Editor, Evening Standard A Dynamic Approach to Corporate Pensions Disclosures 8
About Punter Southall Group The Punter Southall Group was founded in 1988 and provides a unique range of financial services including actuarial consulting, administration, employee benefits consulting, covenant assessment, independent financial advice and investment services for pension funds, corporates and individuals. Putting clients first with the right team of individuals No two clients are the same and we respect that. By harnessing the diverse skills of our people, we deliver the results that meet our clients needs. Punter Southall Group key facts: Advising over 1,000 pension schemes, companies and organisations from a broad spectrum of UK businesses, charities, unions and institutions 4,000 private clients Administering the pensions for more than 235,000 scheme members 118m Group turnover 6.5bn of assets under advice Over 750 staff in 11 offices across the UK The Group is owned entirely by its staff. Our key values are: Collaborative Progressive Dedicated We put the right team together, from the broad range of resources across our Group, to form close working relationships with our clients. We help our clients anticipate and manage their pension-related risks. We go the extra distance for our clients and work with them to develop and maintain long term relationships. 9 A Dynamic Approach to Corporate Pensions Disclosures
Find out more Neil Lalley 01483 330 100 neil.lalley@puntersouthall.com company/punter-southall @puntersouthall Alternatively, please speak to your usual Punter Southall contact A Dynamic Approach to Corporate Pensions Disclosures 10
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