How to avoid insolvency
Last week, the Financial Services Commission hosted its annual pension seminar in Kingston where consulting actuary St Elmo Whyte suggested that avoiding insolvency begins with vigilance of the trustees and fund managers.
Whyte advised that trustees should meet at least four times per year, demand detailed reports from the investment manager and administrative manager, demand forecasts of economic performance in each upcoming year as well as the medium term, and ensure recommendations from actuaries are speedily implemented.
"You don't operate a pension scheme in your office; it is operated in an economy," said Whyte.
"You should be demanding every year full paper about prospects of the economy, so that when decisions are to be taken the environment are fully integrated into the pot," he said.
The possible cause of insolvency highlighted by the actuary include contribution rates of employer that are too low to sustain the plan; the rate of interest credited to member contributions being higher than the rate of return for the fund; and none or inadequate funding for indexation.