Towers Watson has launched an application (app) for iPads to help employers and trustees understand the factors that affect the size of their defined benefit (DB) pension deficits.
The Funding Illustrator App allows employers and trustees to engage with the possible outcomes from actuarial valuations much earlier in the valuation process, as well as determining when they can expect the scheme to be fully funded and the contributions that might be required.
Adam Boyes, a senior consultant at Towers Watson, said: “Giving [employers] and trustees the ability to perform actuarial calculations on their own iPad will help them get a deeper understanding of how sensitive valuation results are to key assumptions and of how much prudence they are building in.
“This can help illustrate the risks inherent in funding DB schemes, including the consequences of investment returns falling short of expectations or of members living longer than anticipated.
“Through this app, [employers] and trustees will be able to estimate the level of contributions that would be required to address the deficit and the effect that using the flexibilities in the current scheme funding regime would have, such as extensions to recovery periods and making advance allowance for investment out-performance.
“This will be valuable at all stages of the valuation process from providing early indications of possible results soon after the valuation date, through to facilitating final-stage negotiations between trustees and [employers] with results being modelled live in the meeting.”
