Benefit Scheme 'Product'

Question 1

Advantages of employer scheme

Answer 1

–Target particular employee groups
–Consistent approach to all employees
(less problems than when all in different schemes)
–Flexible benefits can be offered

Question 2

Advantages of industry-wide scheme

Answer 2

• -Range of benefits possible
• -sense of Identity for the industry
• -increased Mobility for workforce
• -cost Efficient provision

Question 3

Reasons why employers finance benefits for employees

Answer 3

• -compulsion/encouragement for the State
• -desire to Look after employees
• -Attract + Retain good quality employees
• -Pool expenses and expertise

Question 4

Information to be disclosed in benefit scheme

Answer 4

Directors’ pension costs
Investment strategy and performance
Surplus/deficit arising in last year and surplus/deficit accrued
Calculation method and assumptions
Liabilities accruing over the year and to date
Options and guarantees
Sponsor’s and members’ contribution obligations
Uncertainties (risks)
Rights on wind up
Expense charges and entitlement to benefits

Question 5

When should information be disclosed

Answer 5

• Payment commencement
• Request
• Intervals
• Combination
• Entry

Question 6

Importance of disclosure

Answer 6

• Sponsor becomes aware of financial significance
• Informed decisions can be made
• Misselling avoided
• Manage member expectations
• Encourages individuals to make own provisions
• Regulatory requirement
• Security of scheme improved with greater accountability to trustees and sponsor