We have experience of a competitor buying the sponsoring employer of a pension scheme. The new owner wanted to close the pension scheme to future accrual as well as increase significantly debt secured on the business. The closure consultation was a matter for the employer and the members and not a matter for the Trustee to negotiate. We believe that the Trustee role is to help ensure that the process is in accordance with the rules of the pension scheme and the relevant legislation. The Trustee is not the elected representative of the workforce.
Regarding the increase in secured debt, an agreement was reached involving immediate significant cash contributions (spread over the company year-end for Corporation Tax reasons) and an escrow account whereby the monies were used for an enhanced transfer exercise. Any residual escrow monies were payable to the pension scheme. Furthermore, a long-term funding target of self sufficiency was agreed with appropriate company deficit repair contributions.
