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A B C D E F G H I J K L M N O P R S T V W Y

Provision of security and contingent assets

Provision of security and contingent assets

Sometimes it seems as if employers have no alternative to putting more and more money into their pension funds, with little or no chance of getting any of it back, even if the scheme moves into surplus or starts to wind up.  Employers paying substantial deficit reduction contributions are frustrated when the deficit at each valuation hardly ever seems to reduce. This can be due to changes in actuarial assumptions, or even as a result of changes in the economic climate, or there is a change in pensions legislation.

Providing security or contingent assets may be an alternative to putting extra cash into the pension scheme.  For example, granting a charge over a factory or business premises, or a parent company or a bank entering into a guarantee, gives the pension scheme something to draw on if the worst happens and the employer can no longer meet its commitments to the scheme. 

These documents have to be carefully drafted and agreed, to make sure that they have the desired effect of reducing the pension scheme’s liabilities (including potentially changing the assumptions on which the pension scheme calculates its liabilities).

We have wide experience of these exercises, acting for both employers and trustees on many occasions.  We understand the issues and motivations of both parties, and can help to find a solution that aims to benefit everyone, including the members.

Useful Downloads

Pensions Leaflet