Client feedback


Very professional and engaged service.
Danny Nussbaum,
HR Director, Volvo
PSGS was chosen because of their knowledge of the subject and awareness of our particular schemes.
George Batho ,
Trustee, Lansing Linde
PSGS were overall more professional than others.
Paul Staniland,
Kier
​They are very proactive and full of new ideas, they've brought better scheduling and better minute sets.
Paul Rudd,
Express Newspapers
These days, Boards need real expertise on tap (with excellent back-up) to cope with a constantly evolving and more regulated environment. PSGS is geared to delivering that.
Ray Pygott,
Partner at KPMG LLP
It’s a pleasure working with key members of the PSGS team: their experience and leadership means that they know how to get the job done, working in partnership with fellow trustees, employers and advisers to achieve the best result for members.
Mark Smith,
Partner at Taylor Wessing
image for Distressed pension schemes | CVA | RAAs

Distressed pension schemes

A pension scheme or scheme sponsor in distress is a complex and difficult time for pension trustees. Specialist help is usually needed to find the solution that offers the best protection for member benefits.

A pension scheme facing an extreme funding deficit and/or sponsoring employer facing insolvency is serious. There is no simple solution to such complex situations - many approaches to restructure pension schemes can be considered. Employer insolvency and entry into the Pension Protection Fund (PPF) is not necessarily inevitable.

We have an extensive track record of acting as independent trustee for pension schemes in PPF assessment. However, our experience shows outcomes can be improved if we are appointed as professional trustee to a distressed pension scheme well ahead of PPF entry.

Approaches to restructuring and insolvency

We help pension trustees and pension scheme sponsors understand the issues they face as well as the approaches available to them, such as:

Regulated Apportionment Arrangements (RAAs)

This is a restructuring technique available to some sponsoring employers enabling them to break ties with their defined benefit (DB) scheme and potentially avoid an otherwise inevitable insolvency. The pension scheme usually enters the PPF or, where funding is sufficient, member benefits are bought out above PPF levels (a PPF+ buy out).

This complex process requires liaison with both the Pensions Regulator (tPR) and PPF. A clearance application must be submitted to tPR before the PPF will become involved. The PPF’s restructuring principles must also be met.

Company Voluntary Arrangement (CVA)

This is a legal agreement between an insolvent employer and its creditors to pay back a compromised amount over a set period of time, in order for the employer to continue trading. As a DB pension scheme is often the largest creditor, pension trustee consent is usually needed for a CVA to be put in place.

Where the CVA affects the company pension scheme, the PPF’s restructuring principles must be met and the PPF would expect the CVA to produce a better outcome for pension members than would be achieved through standard insolvency.

PPF+ compromise

A PPF+ compromise deal involves the pension trustees agreeing to buy out member benefits at a level higher than would be provided under the PPF. This agreement may be with the scheme sponsor, where they are solvent but in crisis, or involve the PPF where the employer is insolvent but the scheme is sufficiently well funded to secure benefits at a greater than PPF level.

Case study - SR Technics (airline supplier)

Objective: help an employer struggling to meet its UK pension obligations

What we did: following agreement of a compromise of the scheme's debt with the Swiss parent company (cleared by the Pensions Regulator), the scheme entered PPF assessment. As the scheme was funded above PPF benefits, a ‘light touch’ assessment process was agreed. A c£200m buyout at 120% of PPF benefits was then completed.

If your pension scheme is in distress or the scheme sponsor is at risk of insolvency, we can help find the optimum outcome. Contact us to find out more.

Speak direct to our specialist in this area

Picture of Alex Davies Director at PSGS

Alex Davies

Director

Or call us on:

0845 313 0024

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