pension deficit

Charities in England receive Boost from Pension Deficits

havenifa

havenifa


Posted on: 12th June 2020

According to a recent report, 75 per cent of charities across the UK are facing a funding ratio of less than 100 per cent for their pension plans. It is recommended that these charities suspend contributions before the pension deficit worsens. 

Charities in England and Wales meet an increase in pension deficits that will intensify financial hardships they are currently facing as a result of the coronavirus pandemic. This is according to a report from Hymans Robertson.

The report analysed the income of 40 of the largest charities in England and Wales, with the average funding ratio of their defined benefit plans being 92 per cent. What’s more, the average pension deficit is 15 per cent of unrestricted reserves. 24 per cent of these charities have a funding surplus, according to the report.

With 75 per cent of charities currently facing a funding ratio of less than 100 per cent, and the pandemic creating financial struggles for both fundraising and retail income, the report concludes that suspending contributions is the best solution.

In March, the Pensions Regulator published guidance that highlights the suitability of suspending defined benefit plans at the moment.

The preport read: “The COVID-19 pandemic has placed many charities under significant financial strain with fundraising and retail income particularly badly hit and with a need to conserve cash,” said Alistair Russell Smith, head of corporate DB at Hymans Robertson, in a news release. “In many cases there is additional concern as DB pension deficits have also increased. On top of this, there is extra worry for pension schemes in the sector as forthcoming regulatory changes are putting pressure on charities to pay off pension deficits quicker.”

Stay up to date with the latest pension news with Haven IFA

If you are currently seeking financial advice in the Greater Manchester area, you need an IFA that is up to date with all industry news. At Haven IFA, we are here to let you know when to expect any changes and can offer advice on how to make these changes work for you. Get in touch to find out more.

We are Open!


Please note that the team at Haven IFA are working remotely and shall continue to provide our current and future clients with our services. If you have any enquiries feel free to get in touch!

Get in Touch