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One of the statutory objectives of the Pensions Regulator (tPR) is to ensure that members' benefits are protected. But there are circumstances where sponsoring employers will no longer be able to support the benefits that they have promised to members, and that is when some form of restructuring is needed.
In these situations, the options for dealing with the pension scheme must be considered in detail to ensure that it is being treated equitably. It is also crucial that restructuring proposals don't fall foul of either the Pensions Protection Fund (PPF) or tPR.
Outlining the options for schemes in distress
We offer specialist advice to either employers or trustees. We have developed a number of innovative proposals ourselves, or have guided trustee clients through proposals made by employers, giving our insights on whether they are feasible.
We have advised trustees and employers on whether the necessary conditions are met to allow a corporate restructuring to go ahead, including providing mitigation to the pension scheme or the PPF. Such restructurings may include the scheme's consensual PPF entry, via the use of a Regulated Apportionment Arrangement (RAA). We have built up a unique insight into the way both tPR and the PPF operate from our close working relationship with both bodies, having advised on many such processes in the past and having run for a number of years an on-going programme of secondments.
We have significant experience of advising other financial stakeholders, particularly lenders, in the context of restructurings involving pension schemes. For example, we can provide advice on optimal exit strategies or on the appropriate level of debt pricing given the risks present in schemes.
In the last three years, we have acted as lead advisers in ground-breaking, pension-centric corporate restructurings, representing the trustees of schemes sponsored by Kodak Limited and UK Coal plc, where we found innovative solutions to complex problems.
We also understand the options available to pension schemes, which address the level of on-going funding that might be required after a restructuring has been completed.
- Viability review and insolvency analysis
- Entity priority modelling
- Restructuring feasibility studies and proposal development
- Assessment of restructuring proposals
- Advice around the issues leading to PPF entry via RAAs
- Negotiation support between all parties, their advisers and the relevant regulatory bodies
- Project management of restructuring plans
- Scenario and options planning, including risk analysis and asset liability modelling, to assess the expected future funding positions and contribution requirements.