Many defined benefit pension schemes are no longer open to accrual and relate to a membership that is no longer connected to the business.
They have become decoupled from the corporation and are often simply a liability and creditor, only vaguely connected to employees. From the point of view of the business, it often makes sense to move towards de-risking and eventual winding up. Arc Pensions Law’s team has deep experience in this area and knows the importance of preparing a scheme for the process. Our advice covers issues such as: Preparing for a buy-in:
- Checking the terms that apply on future events (pension increases, deaths)
- Advising on remedial action for overpayments and underpayments
- Checking that administration practice accords with documentation
- Validating that pensions currently in payment have been correctly calculated
- Closing ‘Barber windows’
- Legally formalising administration practices, and
- Codifying discretions.
Co-ordinating the auction and contract process:
- Clear analysis of legal entitlements and mismatches with admin practice
- Identifying the objectives of the parties and the path to buyout
- Advising on the shape of benefits to insure
- Specifying benefits in an insurer-friendly format
- Negotiating annuity contract and supporting documents, and
- Providing legal advice to ‘sign off’.
Preparing for buyout:
- GMP equalisation
- Benefit specification and audit
- Bulk transfer to a new scheme
- Bulk annuity purchase if not in place already
- Statutory employer reconciliation, and
- Partial termination and demerger.