Eliminating a Deficit

Hobbs The Printers

Hobbs the Printers Limited (Hobbs) operates a closed Defined Benefit (DB) pension scheme which was established in 1988. Within the scheme are liabilities which were originally guaranteed by an insurance company.

As a result of changing legislation the insurance company contended that the guarantees it had agreed no longer applied in respect off benefits accrued after 6th April 1994. This position had been accepted by the trustees to the scheme and, perhaps more significantly, the previous advisers to Hobbs and the Trustees.

The result of the insurance company’s contention was that there was a very substantial funding deficit in the scheme in relation to its overall assets and Hobbs were being required to make financial arrangements to deal with the deficit and meet the Pension Regulator’s funding requirement.
Creative Benefits (Creative) were commissioned by Hobbs to evaluate the situation and undertook a full review of all historic documentation including the Actuarial Reports that had been previously issued to the trustees.

After long negotiations on behalf of Hobbs and the scheme trustees Creative eventually gained the insurers agreement with their opinion. As a result the insurance company fully accepted that it would guarantee liabilities accrued to 6th April 1997, thus providing for the deficit under the scheme to be eliminated completely.

“I was very impressed with the approach that Creative Benefits took to investigating the funding position of our scheme and the extremely favourable cost savings that resulted” said managing Director David Hobbs.

As a result Hobbs, and the trustees, had no concerns about the immediate appointment of Creative Benefits to the full range of employee benefits maintained by Hobbs for their staff.

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