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What Do Pension Consultants Do?

By Melissa Barrett
Updated Mar 03, 2024
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Pension funds differ from retirement funds in that some or all of the monies are provided by the employer rather than the individual. The employer retains control of the finances and makes the investment decisions for the fund. Often, much of the management of the fund is given over to pension consultants. These consultants give advice on financial investments, make certain that payouts are given to retirees, and monitor incoming contributions to the fund. In addition, they ensure that the fund operates in compliance with government regulations.

When establishing a new employee retirement fund, the primary concern of most organizations is the type of fund. This choice is particularly difficult as pension plans that are fully funded by the employer are rare. Generally, these funds involve contributions of actual wages of their employees. As such, pension consultants may be called in to determine how the responsibility of payments to the fund should be distributed.

Once the fund is in place and regular contributions are being made, it becomes necessary to establish a fund portfolio. Some employers choose to manage the investments themselves using pension consultants primarily as actuaries. These consultants assess the risks of potential investments and report their findings to the fund manager. Occasionally, special actuarial licensing requirements may exist for consultants acting in this capacity.

In other cases, the situation is largely reversed. These pension consultants are given instructions to invest certain percentages of the fund in specific types of investments. Within those confines, the consultants are given a fair amount of decision-making power. Such arrangements may be safeguarded by requiring the consultant to get approval from the fund owner for purchases over a certain amount.

Pension consultants often maintain the daily operations of the pension fund. This may include accounting and tax compliance. Most companies require that pension information be included in their annual reports. Usually, it is the responsibility of the consultant to provide this information. In addition, consulting firms may be responsible for handling applications of newly retired employees and arranging regular payouts to these individuals.

Many governments have created rules and regulations governing the operations of pension funds. These laws were designed to protect individuals from the partial or total loss of their retirement monies by mismanagement or misappropriation of funds. These laws vary by jurisdiction but are usually quite complex. It is often the job of pension consultants to assure that pension plans adhere to these statutes.

Practical Adult Insights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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