The answer to this Q may well reveal how much studying I've still to do for the exam!! If two schemes are being merged (both under the same employer) - why would the funding level be a main factor in deciding which scheme should transfer? e.g. if 'A' was 90% funded..'B' 110% (same basis as A) then surely whoever transfers assets/liabs across the resulting position will be 100% all else being equal - so A's fund position has improved..B's slightly diluted what am I missing here?
Well, I still have a lot to do myself (where did this Q come from?). Would suspect that there are several issues there.... Trustees may not be the same trustees Trustees are required to act in best interest of THEIR members (enter the ownership of surplus issue - the scheme that's 110% funded might well want to hang onto that for augmentations) does this trigger debt on employer (I don't know!) - if it does, the scheme with 90% funding will need immediate cash injection, whereas the 110% funded scheme might not or it might be less few of my initial thoughts, anyway. Not sure that actually helped!
Further points to consider: - Co. might be using the funding levels of its schemes to its advantage (perhaps to help remove a surplus [avoiding tax/benefit increases] and simultaneously reduce/meet a deficit - obviously Trustees/members won't be too happy though!) - Co. may be required to pay an additional contribution to bring the merged scheme's funding level in line with B if A is transferred into B, to maintain security of B's benefits - size of schemes will have a bearing - obviously if one is bigger than the other then the funding level won't be the average of the two (although I suppose "size of scheme" is then the factor, not funding level) Hope this gives you some further ideas.
I think my mindset when asking this was that the merger is going ahead regardless and whatever scheme transfers, the same F/L results.....but yes I agree with both your comments...clearly if two sets of independent trustees then they still need to carry out duties/protect security etc....penny has dropped! I'm beginning to wonder if Acted will start charging for this forum..... thanx
