“The work that has been done has been delivered beyond expectations.”
“The trustee training was a very well-paced overview which gave opportunity to explore ideas and question more deeply at key points.”
“Many organisations and people provide the services that clients need. In my opinion, the differentiator is in the way those services are provided and to that extent, Kathy embodies the qualities that I have come to value from PSITL. Kathy is organised but not fussy; diligent but not dogmatic; persistent without being pushy and compliant in a pragmatic way. Whilst she takes ownership and drives issues forward, Kathy is a team player who uses her and her colleagues experience to provide services to her trustee client whilst working closely with those like me representing the sponsoring employer. She works collaboratively with advisers but constructively challenges the scope of services, fees and service standards whenever necessary and makes sure that member needs are always taken into account. I enjoy working with her and trust that she will deliver what is required by the trustee and the members they represent in a manner satisfactory to the sponsoring employer. ”
“Highly informative. Having leading professionals deliver the TKU course really adds value.”
“They deliver above expectation when the scheme has a particular challenge.”
“They have helped us save much more and created a cohesive plan to de-risk whilst building an integrated pension team.”
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.
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.
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.
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.
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