When is a Promise a Strategic Liability?

Employers offer pension plans for two main reasons; paternalism and skills market competiveness. Recent changes in legislation and business practice have promoted the scrutiny of the underpinnings for such a management tradition. The paper identifies several relevant factors that derive from: field work undertaken by the authors; the Pension Act 1995; and recent changes to corporation tax. It is argued that what has emerged is a sharply focused tradeoff, relating to the asset and liability characteristics of employer-based pension schemes. This questions the sustainablilty of all types of pension plans and thereby has a place in strategies affecting financial planning and business development