The insolvency of prominent businesses such as Toys R Us making headlines recently has led to an increased awareness of the impact that corporate activity can have on pension benefits.

Thomson Reuters, at the end of January, announced that it was to sell part of its business to a private equity funds management based in the US.

When the deal was finally agreed, it became apparent that members of the Reuters pension scheme were not aware of many of the details. Anne-Marie Winton warned that that trustees might want to reassure worried members but need to take care not to divulge too much:

She commented: “The key question that members want answered is whether their pensions will be as secure after the sale as they were before. And that is the key analysis that trustees will need to do,”

Anne-Marie said trustees who are faced with a takeover situation should request as much information as possible about the structure of the deal and how it will be funded – especially whether the scheme as an unsecured creditor will be pushed down the ladder by new security given to lenders.

The buyer’s financial strength and long-term plans for the business should also be looked at in detail.

“Be prepared to stand your ground and ask further questions if you are not satisfied with the initial responses received,” Anne-Marie advised.

But some trustees have levers at their disposal. According to Anne-Marie, “there can be some valuable powers in the trust deed and rules”.

These could include additional employer contributions having to be paid unilaterally, or even the winding up of the scheme being triggered.

“Some trusts still have so-called ‘poison pill’ triggers whereby a change of control of the sponsoring employer moves all the employer powers under the trust to the trustees,” she added. “If the trust says this, the trustees ought to know about it.”

Read Anne-Marie’s comments in Pensions Expert and The Baron