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Many firms reward company executives by granting shares, or share equivalents, which vest after several years. Long Term Incentives (“LTI’s”) now increasingly account for a significant proportion of total compensation and are primarily used to align employees’ interests with those of the shareholders.

LTI’s form a core element of Financial Services firms total reward strategy and are referred to in The Financial Services Authority (“FSA”) Remuneration Code.
The revised Code, which came into effect from 1st January 2011, requires certain employees to be designated “Code Staff”. The key impact for these employees is that there are mandatory deferrals of variable remuneration subject to further conditions.

It is therefore essential to carefully evaluate any LTI awards when calculating loss of earnings for litigation purposes.

During the recent economic downturn it has become apparent that the cost of retirement provision has become very expensive. Coupled with an era when asset values have declined, this has led to increasing concerns: Governments, employers and employees alike have now realised that there will not be sufficient savings to enable employees to retire as early as in recent years and maintain their standard of living. Indeed, the need to further increase State Pension Age has already been highlighted and many of the closed Defined Benefit Pension Schemes (“DB”) are now seeking additional employer contributions to fund enormous deficits.

Costs have not only been driven up by asset valuations declining but over the last few years actuaries have determined that mortality tables need to be strengthened. This is to reflect the fact that people are on average expected to live longer and will therefore draw their pensions over an extended period. Obviously this will also have an impact when assessing the financial implications of a personal injury claim.

Why has this come about?

There are several reasons why the retirement landscape is changing so significantly.

The first is increased longevity which means that providing a pension based on only a small proportion of your total life is an unreasonable expectation. For example, if an individual starts work at age 21 and retires at age 55 (the new minimum retirement age to draw pension benefits from 6th April 2010), that will represent an employed period of 34 years service. If the same employee lives to age 90, that means they will enjoy 35 years of retirement whilst drawing a pension. It is totally unrealistic to provide for a pension over such a short period of time and then expect to draw it for another 30+ years. Periods of absence from the workplace due to redundancy or career breaks only increase the pension problem.

Read more: Changing demographics in the UK

During the recent economic downturn it has become apparent that the cost of retirement provision has become very expensive. Coupled with an era when asset values have declined, this has led to increasing concerns: Governments, employers and employees alike have now realized that there will not be sufficient savings to enable employees to retire as early as in recent years and maintain their standard of living. Indeed, the need to further increase Pension Age has already been highlighted and many of the closed Defined Benefit Pension Schemes (“DB”) are now seeking additional employer contributions to fund enormous deficits.

Costs have not only been driven up by asset valuations declining but over the last few years actuaries have determined that mortality tables need to be strengthened. This is to reflect the fact that people are on average expected to live longer and will therefore draw their pensions over an extended period. Obviously this will also have an impact when assessing the financial implications of a personal injury claim.

Why has this come about?

There are several reasons why the retirement landscape is changing so significantly.

The first is increased longevity which means that providing a pension based on only a small proportion of your total life is an unreasonable expectation. For example, if an individual starts work at age 21 and retires at age 55 that will represent an employed period of 34 years service. If the same employee lives to age 90, that means they will enjoy 35 years of retirement whilst drawing a pension. It is totally unrealistic to provide for a pension over such a short period of time and then expect to draw it for another 30+ years. Periods of absence from the workplace due to redundancy or career breaks only increase the pension problem.

Read more: Changing demographics in the US

During recent years I have been asked to prepare career employment and compensation reports by attorneys acting on behalf of both plaintiffs and defendants.

Whilst carrying out these assignments, I have noticed in numerous cases that it has been a common feature for the plaintiff’s actual employment history and educational details to be incomplete. A recent example occurred when an employee had not produced evidence about their degree. After insisting on seeing the actual certificate to verify the details, it subsequently transpired that the degree was of a different class and subject to that which was previously claimed. This type of situation can of course lead to a significant misinterpretation of a plaintiff’s skills, their future career prospects and earnings potential.

Having spent over thirty years in Human Resources, it is apparent to me that often the “employment records” are pulled together by the plaintiff themselves, therefore trying to avoid the need to go to their former employer(s) for the complete and accurate picture. This can of course sometimes be complicated by individuals whose career path has included working abroad, career breaks and having worked for companies no longer in business.

Read more: The Devil is in the Detail