Based on our internal research in respect of costs for a typical scheme of 200 members, we have identified a payback period for DC wind-up of 2 years for winding-up a paid-up scheme, and 3 years for winding-up an active trust-based scheme and replacing it with a contract based arrangement. The different payback periods are shown below.
Both lines relating to wind-up include one year of existing scheme running costs.
Every scheme will be different, but the key message is that DC trust-based schemes (particularly paid-up arrangements) can be wound-up cost effectively, and replaced with something easier to govern. That then frees up the employee benefit budget to spend on services that allow for a better return on your money.
Commission can in some cases be used to offset the costs of winding-up the pension scheme which generates even greater cost savings.
Ian Eadie, Director | T: +44 (0) 117 968 9695 | E: firstname.lastname@example.org
Tom Pook, Head of Discontinuance Delivery | T: +44(0) 117 968 9695 | E: email@example.com
Philip Moran, Discontinuance Consultant | T: +44 (0) 207 558 3044| E: firstname.lastname@example.org