Overseas Employer

A DAX-listed German global industrial group presented its UK pension trustees with a funding and benefits package in advance of the triennial funding valuation, requesting the trustees’ consent to:

• Benefit changes via scheme rule amendment
• Pre-agreed approach to future valuations
• Withdrawal of employer and apportionment request

In return the trustees would receive:

• Parent company guarantee
• Series of enhanced deficit funding payments

Role

• Act for the trustees and analyse the covenant for the valuation

• Assess the impact of the withdrawal of the employer on the covenant and advise whether the trustees could and should agree to the apportionment

• Consider the covenant enhancement offered by the support guarantee

Results

• Worked closely with the trustees’ actuarial and legal advisers to suggest amendments to the employer’s proposal

• Concluded that the withdrawal of the employer would not have a detrimental effect on the covenant

• Trustees were able to agree to the company’s amended proposal resulting in an enhanced covenant and funding plan