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Corporate Activity and Transactions

When undertaking any type of corporate activity such as a share buy-back or the payment of a large dividend, a corporate restructuring or a transaction, companies are now required to consider the impact on the security afforded to their defined benefit pension scheme. Any corporate activity with the potential to be materially detrimental to the ability of a scheme to meet its pension liabilities can lead to the Pensions Regulator (tPR) exercising his anti-avoidance powers which can be very penal. It is, therefore, vital to be aware of the risks inherent in any such activity and, if it is decided to proceed, to mitigate them as far as possible.

Companies can only avoid such penalties by being granted Clearance from tPR, which is effectively his “blessing” in respect of specific events. However it is not always obvious that obtaining Clearance is the best option; often it will come at a price, usually in terms of additional funding. It is therefore very important that companies consider all the relevant issues and risks before deciding on an optimal strategy in terms of the structure of the corporate activity, Clearance, funding, etc.

Although pension schemes can be a bit of a mystery in a transaction situation, they can be one of the most financially significant aspects of a deal. It is vital to get thorough pensions due diligence done at the time to avoid discovering some years later that an expensive mistake was made and that the corporate investment has made a significant loss.

Barnett Waddingham’s corporate team offer a fresh approach to providing pensions advice around corporate events and in transaction situations. Our team of experienced specialist pensions’ professionals also understand firms’ typical corporate objectives and the wider business environment in which companies operate.

We have considerable experience in advising on Clearance and dealing with tPR. We also provide clear and concise vendor or purchaser due diligence services which will vary depending on the needs of the two parties. We are alert to potentially “hidden” liabilities and provide clear communications on complex pensions issues to provide clients with sound and pragmatic advice.

For further information on our services in this area, please contact

CorporateTransactions@barnett-waddingham.co.uk.