Under the Pensions Act 2004 clearance statements from the Pensions Regulator may be sought for certain types of transaction (see below) where they are financially detrimental to the position of the pension scheme and sufficiently material with respect to the sponsoring employer. We provide assistance to the instructing party (trustee or sponsoring employer) in assessing the need to seek clearance and in the process of requesting clearance from the Pensions Regulator.- Change of priority – transactions involving a change in the level of security given to creditors with the consequence that the pension scheme creditor might receive a reduced dividend in the event of insolvency.
This would include, for example, refinancing involving the granting of a fixed or floating charge. - Change of control structure – transaction involving a change (or partial change) in the group structure of the sponsoring employer which reduces the overall employer covenant and could affect the ability of the sponsoring employer to meet a potential section 75 debt and lead to the Pensions Regulator imposing a financial support direction.
This would include, for example, a change in (one of) the parent company(ies) of the sponsoring employer.
- Return of capital – transactions involving the reduction in the overall assets of the company which could be used to fund a pension deficit.
This would include, for example, the payment of dividends, share buy backs and dividend strips. Scheme funding issues Due to recent changes in pension legislation, we have encountered pension schemes funded on a MFR basis, as well as on an FRS 17 basis. With the introduction of the SSF requirements we liaise with scheme actuaries regarding the required funding levels on the relevant basis to provide assessments of the ability of the sponsoring employer to meet these targets. Withdrawal arrangements We can review the ability of the guarantor to meet its obligations and help facilitate withdrawal arrangements for the pension scheme where necessary. Negotiation support We assist with pension scheme negotiations regarding: - security available to the scheme/enhancement of scheme’s priority in the order of creditors
- affordability of recovery plans by the sponsoring employer regarding the scheme’s requirements
- negotiations with the Pensions Regulator and the PPF
- Corporate Finance support in transaction structuring.
Pension simplification reviewsPension scheme and corporate restructuring We advise on and help to implement: - pension scheme restructurings and compromises
- other pension scheme-driven corporate restructuring.
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