The Preservation of Pension Rights

Extract

Following upon the growth in the number of pension funds which has occurred in recent years, employers have become increasingly concerned with the preservation of the pension rights of employees leaving their service to enter that of other employers who may even be competitors. Having accepted the obligation to provide pension benefits for his staff as a whole, an employer must decide to what extent, if any, he wishes to preserve the pension rights of transferring employees. Before reaching his decision, however, he will, if he is wise, seek the guidance of the actuary to the fund, who should be prepared to present the alternative fundamental principles and attitudes open to him. From these should follow his decision as to whether he has an obligation to preserve the pension rights of transferring members of his staff and, if they are to be preserved, how the actuary should make the relevant calculations. Whilst decisions must ultimately rest with the employer, the actuary must be fully conversant with the subject as a whole so that he can give sound advice and be able to make the necessary calculations. It is the actuary's duty to present all sides of any problems which arise in connexion with the scheme and to indicate the consequences which may result from the employer's decisions.