IN this week's SME Focus an enterprising actuary explains how changes in the pensions market are creating opportunities as well as challenges for numbers specialists.

Name: Andy Thomson.

Age: 47.

What is your business called?

Thomson Dickson Consulting

Where is it based?

Glasgow.

What does it produce, what services does it offer?

Actuarial, administration and governance services for defined benefit (DB), or final salary, pension schemes. Actuaries provide commercial and financial advice on the management of a business's assets and liabilities. Pension schemes require an actuary to regularly value the assets of the scheme and compare them to the value of the retirement benefits that will be paid in the future.

DB pension schemes provide retirement benefits calculated from the length of time a person worked for the company and the salary they earned. The money to pay these benefits is held in one big fund. Defined Contribution (DC) schemes are individual pots built up and owned by each member. When the member retires, the amount of cash and regular income available will depend on how big the member's pot is.

Who does it sell to?

Trustees responsible for the administration, investments and governance of final salary pension schemes. We also provide actuarial services to the employers who fund these schemes.

Most of our clients have small to medium-sized pension schemes with fewer than 1,000 members. The majority of clients are spread throughout Scotland and tend to be long standing businesses which set up final salary pension schemes many years ago. The trustees are required to pay the right benefits to the right person at the right time.

What is its turnover?

£1 million a year.

How many employees?

In addition to the two directors, there are eight full-time and three part-time employees.

When was it formed?

The business became Thomson Dickson Consulting in its present form in 2007 but it was essentially the renaming of an existing similar business that we established back in 2002. At the outset there had been four actuaries involved but after a difficult first year my current fellow Director, Ann Marie Dickson, joined me in reforming the business for growth.

Why did you take the plunge?

In 2002 there was the opportunity to work with other self-employed actuaries to set up a new breed of pensions consultancy business in Glasgow, as part of a network of similar partnerships throughout the UK. Clients were to be sourced by the London head office and allocated out to the regional offices. At the time, this seemed the natural next step from being a one man band to becoming a partner in an actuarial consultancy.

What were you doing before you took the plunge?

I was a self-employed actuary working on the Financial Services Authority's personal pension mis-selling review, which finished in 2002. Prior to that I trained as an actuarial student at Scottish Amicable, which later became part of Prudential.

How did you raise the start-up funding?

Start-up requirements were quite modest and met by a combination of savings and a personal loan.

What was your biggest break?

At the time it was probably considered to be our worst moment, but the decision by the London office to exit the partnership before it was properly established turned out to be the best possible outcome.

Ann Marie and I were then able to grow the business the way we wanted to.

What was your worst moment?

As above. We realised very early on that the business model was flawed and a London office was never going to deliver the clients we wanted to us and we were at a real low when it exited the partnership. We had to get out there and convince trustees and employers that an unheard of, inexperienced, small pensions consultancy was right for them. Slowly and surely we did.

What do you most enjoy about running the business?

Meeting clients in a wide variety of industries and hearing about the steps they are taking to adapt longstanding businesses for current times. When many DB pension schemes were set up, the regular cost to the employer was quite modest, likely to be a small percentage of employees' salaries.

Over time, the costs to be paid by employers to fund DB schemes have grown significantly as people are living longer and there is more legislation and low investment returns. A further headache is the time that has to be spent understanding and managing the scheme's issues.

What do you least enjoy?

Writing technical articles about the latest pensions' legislation.

Give me statistics to analyse and a calculator any day!

What are your ambitions for the firm?

Although the DB pensions market is in longer term decline as employers use defined contribution plans for their pension provision, employers and trustees will continue to need actuarial and administration services for their closed DB schemes for many years to come. Our analysis shows that 84 per cent of small and medium sized private sector schemes are closed to existing members which means that the members who still work for the company are not building up any extra benefits each year. The amount of pension they are entitled to was calculated at the date the scheme closed and will only increase by inflation until their retirement age.

Thomson Dickson Consulting has plans to double our market share over the next five years. We also plan to create a new division providing DC retirement solutions for SME employers and their employees.

What are your five top priorities?

My wife, three children and two dogs. Oh, that's six!

From a business perspective, raising profile is our top priority. We also need to adapt to change so expanding our investment proposition and further developing our "at retirement" material for pension scheme members are next on the list. Not all members will have a financial adviser and we need to produce information in the run up to retirement that clearly explains the value of the member's retirement savings.

What could the Westminster and/or Scottish governments do that would help?

The introduction of a less complex state pension from April 2016 should make it easier for people to understand what they will receive from the state when they retire. But the Government needs to do more to communicate the importance of planning for retirement well before the state pension age. If all employees were to receive a regular communication that clearly and simply showed the value of their state pension benefit, it would encourage many people to make additional retirement savings earlier in their working life.

It would help greatly if pensions legislation didn't keep changing. The majority of the schemes that we deal with are closed to new members and to future accrual of benefits as they seek to manage costs. However, they still need to make changes to comply with new legislation and this can often incur unwanted additional expense.

What was the most valuable lesson that you learned?

Choose your business partners carefully. I think it is very important to work with people who share your passion and vision for the business but at the same time, bring a perspective that is different from your own.

How do you relax?

I used to play golf regularly but stopped when I was disqualified for carrying seven clubs in a six club competition. When the second puppy is older, I intend to rediscover a routine of jogging, not running, with the dogs.

I am also learning to play the piano but struggling to avoid playing by numbers!