According to Morten Nilsson, companies are losing significant funds to insurers via buyouts of traditional pensions. He supports government plans allowing recovery of surpluses, suggesting that this could lead companies to maintain their pension schemes. Many boards may find running their schemes preferable to committing to buyouts, emphasizing the financial costs involved in transferring responsibilities.
Companies managing traditional pension funds are surrendering a substantial amount of money to insurance companies when they pursue buyouts, as indicated by Morten Nilsson, chief executive of the £37 billion BT Pension Fund. He expressed support for recent government initiatives aimed at allowing sponsors to reclaim surpluses in defined benefit schemes, which could incentivize companies to maintain control over their funds instead of transferring them to insurers.
Considering Alternatives
According to reports by Nilsson, many boards may find it more advantageous to continue operating their schemes rather than opting for immediate buyouts. He emphasized the critical need for these companies to recognize that transferring their pension obligations to insurers entails forfeiting considerable financial resources. This newfound government support could reshape their decision-making and maintain pension schemes more effectively.
The insights presented by Morten Nilsson highlight significant financial implications for companies managing pension funds considering buyouts. Recent government proposals could encourage sponsors to reconsider their options and potentially retain greater financial oversight and control of their pension obligations.
Original Source: www.thetimes.com
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