Occupational Pensions Trusts (OPT) reacts positively to the Pension Protection Fund's (PPF) announcement that it proposes to change the assumptions underpinning scheme valuations.

The proposed moves should, OPT said, give schemes the chance to maximise member benefits, and could allow more scheme members to secure higher benefits than if their scheme falls into the PPF's lifeboat.

However, Ben Shaw, development director of OPT, added that trustees of schemes that manage to avoid entry into the PPF should take care to consider all their options, including allowing the scheme to run as an occupational pension, rather than just assuming they must accept an insured buy-out solution.

"The ideal is that all members get the full 100p in the pound whereas the PPF currently imposes limits such as only paying 90p for deferred members. Trustees of schemes that are sufficiently well funded to pay more than PPF levels may, for example, still only be able to secure 92p or 93p from an insured buy-out. Alternatively they could continue running the scheme, potentially paying more generous benefits to all members in the short-term and with the long-term objective of paying full benefits."

Shaw added: "We believe that if costs are controlled and suitable investment strategies followed, many schemes would recover to pay better levels of benefit than insured solutions which allow no possibility of recovery and are likely to be calculated on very cautious investment assumptions."

He said trustees have a duty to act in the best interests of their members, and part of that could mean not allowing their schemes to be forced into a buyout without considering other options, such as looking towards OPT for help.

- Pensions Age August 2009

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