Beware pension maze, warns CFDG

Many UK charities face serious financial risk relating to pensions, a report from the Charity Finance Directors' Group has warned.

The report, The 2008 Charity Pension Maze, says pensions pose charities serious valuation, governance and organisational issues.

The report warns that the Accounting Standards Board and the Pensions Regulator have both suggested using much more conservative methods of pension valuation to accurately assess the risk and longevity of schemes. Combined with the turmoil in the financial markets, these changes could see scheme values drop dramatically.

The report also warns that charities need to take a more active part in the governance of their pension schemes and that charities need to consider pension issues closely when organisations merge.

Keith Hickey, chief executive of the CFDG, said: “Pressure is mounting on UK charities. The number, range and complexity of pensions issues they are facing is consistently increasing and the risks are getting worse.

“It is essential that charities take action now to ensure the long-term health and viability of the sector, and we hope this publication guides them through their decisions.”

The report is available to download.

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