Helping clients with their triennial valuation

As a client was approaching their triennial valuation, the prevailing economic conditions were a key challenge to the funding negotiations between the Trustees and the Company. We worked closely with the Trustees and the Company to gain an understanding of the trading environment and the competing cashflow demands they had for investment within the business. This included exploring a range of funding support options that could be beneficial.

The outcome of these talks was the establishment of a reasonable free cashflow sharing arrangement that allowed an appropriate level of minimum contributions to be paid to the Scheme, with upside potential for additional contributions, whilst at the same time recognising the Company’s competing investment needs across the business. The agreement centred on the cash-flow generation of the business, rather than disclosed profit, as this was the key driver for the Company’s investment plans.

The discussions were made more challenging as they also took place against the backdrop of the Company’s separate negotiations with the trustees of the multi-employer non-associated pensions schemes that they participated in and the material competing cashflow requirements generated from there.

Taking a pragmatic view and recognising the framework and constraints that the Company was operating in, we were able to agree a fair robust long term plan for the funding of the Scheme.

In addition, this means that as the Trustees approach their next triennial valuation, there is a long-term funding framework in place that will, hopefully, allow the funding negotiations to be more straight forward and be sufficiently flexible to accommodate any necessary adjustments. This collaborative approach to working with the Company has provided long-term benefit for all.