Pension scheme deficits are often at the centre of restructuring
negotiations. We discuss the issues.
Recent corporate activity such as that surrounding Uniq
(formerly Unigate), Cattles Plc and Aquascutum, along with court
judgments such as Bloom & Ors v The Pensions Regulator (2010),
have shown that defined benefit pension schemes are often at the
centre of restructuring discussions and that pension trustees and
the Pensions Regulator are key players in this arena.
Contributory factors
Many companies remain responsible for substantial pension
liabilities, even when the build up of new benefits under the
scheme has long since ceased. There are numerous factors that have
contributed to the prominence of pension scheme deficits. Increased
regulation, together with the Pension Protection Fund (PPF) levy
(based on the strength of the employer covenant), has escalated the
cost of funding a defined benefit pension scheme. The volatility of
equity markets continues to
