Defined benefit pension schemes in lending transactions


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert
Practice notes

Defined benefit pension schemes in lending transactions


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert

Practice notes
imgtext

Although defined benefit pension schemes (DB schemes) are in decline in the private sector, there still remain in excess of 5,000 private sector DB schemes with over nine million members.

Concerns around underfunding and employers attempting to evade liability have resulted in a complex regulatory and legislative landscape that mean DB schemes should be considered by lenders and their lawyers at the outset of a transaction and during any restructuring or insolvency.

The Pensions Act 2004 (PeA 2004) gave the Pensions Regulator (TPR) the ability to issue contribution notices or financial support directions to parties connected or associated with the scheme employer, making them liable to provide support or funding to underfunded DB schemes (known as ‘Moral Hazard’ powers). Further, PeA 2004 introduced a legal requirement to notify TPR about various events which occur in relation to a scheme employer under a DB scheme. This includes a requirement to notify TPR of a breach of lending covenant.

The issue of underfunded DB schemes was drawn into the spotlight again following a number of high

Powered by Lexis+®
Jurisdiction(s):
United Kingdom

Popular documents

Financial clean break orders in family proceedings

Financial clean break orders in family proceedingsDuty of the court to consider a clean breakAlthough there is no presumption in favour of there being a financial clean break between parties on divorce, the court is under a duty to consider whether it would be appropriate to exercise its powers so

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid

Contributory negligence in personal injury claims

Contributory negligence in personal injury claimsContributory negligence is a partial defence which can lead to a discount in damages.Other defences may also be relevant. See Practice Notes: Did the claimant consent to the risk of injury? and Was the claimant involved in an illegal activity?If a

Where are misrepresentations made? Jurisdictional traps for the unwary (Bellmare Holdings Ltd v Wells)

Dispute Resolution analysis: The High Court has provided concise guidance as to how misrepresentation should be analysed when considering jurisdictional gateways. Under Article 5(3) of the Lugano Convention, in negligent misstatement cases, the place of the event giving rise to damage is normally