Pensions: Corporate Agenda
In this edition we look at three current issues:
Pensions de-risking transactions continue to grab the headlines (at least in the Pensions world!), with the recently announced £4.5bn Rolls-Royce pension fund buyout with Legal & General the largest transaction of this type to be carried out so far. But how do these transactions work and, other than price, what are the key issues? In this edition of Corporate Agenda, we look at buy-ins and buy-outs, longevity swaps, and the new DB commercial consolidators in more detail.
Directors duties, Sequana and the pensions White Paper.
Earlier this year, the Government published its consultation response setting out proposed changes on protecting DB pension schemes. Shortly before the response was published, the Court of Appeal considered the case of Sequana. This looked at when directors must have regard to creditors as opposed to shareholders in taking decisions. The Government’s consultation has important ramifications for directors and other creditors. Directors will need to notify the Pensions Regulator and pension trustees in certain circumstances where other creditors will not be informed. The Pensions Regulator will also be given new powers. We consider further here how these changes sit alongside a director’s duties to other creditors as set out in Sequana and how else creditors might be affected.
Trustee duties to employers.
In KeyMed v Hillman, the Court considered whether trustees of a pension scheme owe duties towards the sponsoring employer. In unusual circumstances, the Court concluded that trustees do not owe fiduciary or equitable duties to the sponsoring employer. They may have regard to the interest of sponsoring employers but must not subordinate their primary duty to the beneficiaries. This decision can be contrasted with the recent BA litigation, where the Court decided that the trustees had a “duty” to take account of all relevant factors, including the interests of the employer. Read more about the Keymed decision here.
For more information, or to find out how our Pensions team can support you, please speak to one of our Pensions lawyers below