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Pensions funding, security & restructuring

Sunday, 25 August 2019

Current market and demographic conditions are presenting an unprecedented funding challenge to defined benefit pension schemes and their sponsors.


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Head of Pensions

Daniel Gerring

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+44 (0)20 7295 3341

Daniel is Head of Pensions at Travers Smith. He advises on all aspects of pensions law, acting for trustees and employers as well as parties to corporate activity.

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Against this backdrop, the Pensions Regulator expects trustees to be taking an integrated approach to funding, investment and employer covenant risks. We are experienced in helping clients navigate the legal aspects of this increasingly sophisticated area. We work closely with all of the major employer covenant advisory firms.

Our practice is well balanced between trustees, employers and corporate groups. We understand that there are different perspectives and can foresee where stumbling blocks may arise. Our specialist pensions, finance, security and restructuring lawyers work as one team to cover the full range of clients' needs, including:

  • Strategic and tactical advice during funding negotiations, including the legal "balance of power" in the scheme's funding rules, and documenting scheme funding settlements.
  • Analysing and advising on the legal aspects of the employer covenant, and working with employer covenant advisers to help sponsors and trustees get a complete picture.
  • Structuring and implementing contingent support and other security for pension scheme funding including guarantees, escrow arrangements, security over assets, collateralised structures, asset-backed contribution (ABC) arrangements and bank letters of credit.
  • Advising on the legal aspects of long-term pension scheme funding arrangements with a view to the scheme's overall journey plan towards self-sufficiency and/or buy-out.
  • Advising on the implications of non-UK entities and newly-incorporated SPVs sponsoring a scheme.
  • Dealing with employer exits and group reorganisations that affect the covenant, including options for management or recovery of employer "section 75" debts and the use of flexible apportionment arrangements, scheme apportionment arrangements and similar mechanisms.

We also assist sponsors and schemes where the employer is financially distressed or the scheme is jeopardising the ongoing viability of the business.  We are well-versed in the full range of issues in this area including:

  • Insolvency and restructuring of sponsoring employers and groups.
  • Implications of overseas insolvency for UK pension schemes.
  • Pension Protection Fund levies, compliance and assessment period management.

Our work in this area is often at the cutting edge of law and practice and our industry links and appointments ensure we are engaged with developments in regulatory policy and changes to legislation.

"The team has 'some of the best pension experts around'."

Chambers, 2016

Work examples

  • Acting for the trustee of the British Steel Pension Scheme on separation from Tata Steel through a 'regulated apportionment arrangement' and setting up a replacement scheme offering members an alternative to PPF compensation.
  • Advising the Trustees of the Lehman Brothers pension scheme on all aspects of the bank's insolvency including PPF assessment, the ground-breaking Financial Support Direction litigation (up to the Supreme Court) and on the settlement and buy-out to secure all member benefits in full.
  • Advising Carpetright plc on its successful restructuring. This included working closely with the PPF and the legal advisers to the Carpetright plc Pension Plan's trustees in order to structure and deliver the CVA during the Plan's short-lived PPF assessment period.
  • Advising the Trustee of the C&J Clark Pension Fund with its most recent valuation and covenant discussions with its sponsor group.
  • Advising the Trustee of the MGN Pension Scheme (Trinity Mirror's largest DB pension scheme) with its most recent valuation and covenant discussions with its sponsor group.
  • Advising the trustees of the BAE Systems Pension Scheme on full segregation of the scheme into sections for BAE Systems and Airbus. This involved agreeing the splits of assets and liabilities, managing potential section 75 debts, revising the funding and security arrangements and reviewing governance arrangements.
  • Advising the trustee of the Guilbert UK Retirement Benefits Plan on the pensions and structuring aspects of the sale by Office Depot, Inc. of its European business to The Aurelius Group.
  • Acting for the trustees of a major blue-chip pension scheme in relation to a £1 billion contingent covenant support agreement.
  • Advising The Greenalls Group Pension Trustees in relation to the restructuring of the De Vere hotels group, one of the largest debt-for-equity swaps in UK corporate history.

Industry appointments

We participate in a wide range of pensions industry groups including the Legislative and Parliamentary Sub-Committee and the Covenant and Finance Sub-Committee of the Association of Pensions Lawyers.