Pensions Funding

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

Pensions Funding

Overview

The Pensions Regulator therefore expects trustees to take an integrated approach to funding, investment and employer covenant risks. We help clients navigate this increasingly sophisticated area working closely with 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.