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Key points

  • Corporate transactions are events that may affect the employer’s finances or underlying structure.
  • You may be asked to provide advice to the trustees or to the employer on areas related to corporate transactions including applying for clearance, proposed abandonment arrangements and options when leaving multi-employer schemes.

Corporate transactions

Corporate transactions are employer-related or scheme-related events that may affect the employer’s finances or underlying structure, such as:

  • selling or restructuring their business
  • making a return of capital
  • exiting a multi-employer pension scheme

You may be asked to advise the trustees or the employer on the impact of corporate transactions on their defined benefit (DB) pension scheme.

Clearance

You may be asked to advise trustees whether you consider that a corporate transaction is materially detrimental to the scheme’s ability to meet its liabilities. If this is the case, the trustees should consider whether to ask the employer to consider whether it thinks it might be appropriate to apply for clearance from us. For examples of material detriment, read our code-related guidance on the material detriment test.

The clearance statement provides assurance that we won’t use our anti-avoidance powers in relation to the transaction. For more information on when employers should consider whether it might be appropriate to apply for clearance, read our regulatory guidance on clearance.

Abandonment

Abandonment of a pension scheme is where the sponsoring employer cuts its link with the scheme without providing the scheme with sufficient funds or assets to compensate for losing the employer’s ongoing support. This could happen, for instance, when the employer carries out a significant restructuring or transfers their scheme liabilities to another employer.

You may be asked to analyse a proposed abandonment arrangement to help trustees reach a decision with other parties whether it is in the members’ best interests. Trustees should consult with us at an early stage in the process.

For more information, read our regulatory guidance on abandonment of DB pension schemes.

Leaving multi-employer schemes

There are a number of different ways that employers can manage their obligations to their scheme if they leave a multi-employer scheme. You may be asked to provide advice to the employer to decide which option is most suitable and to the employer or to the trustees to ensure that the scheme’s liabilities will continue to be appropriately funded.

For more information, read our regulatory guidance on multi-employer schemes and employer departures.

Notifiable events

If you become aware of a failure by trustees or an employer to notify us of a notifiable event, you should report the failure to us as a breach of pensions legislation likely to be of material significance. For more information, go to our codes of practice on notifiable events and reporting breaches of the law.

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