Construction firms operate sophisticated vetting and pre-qualification schemes for their supply chain but an important, often overlooked, issue for parties entering into contracts is whether the solvency of the other contracting parties could be threatened by an underfunded final salary pension scheme. Final salary pension schemes differ from other pension schemes in that the employer promises a particular level of pension to its employees calculated with reference to their final salaries. The employer is then responsible for ensuring that the funding in the pension scheme is sufficient to meet these promised benefits.
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