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Regulatory advisory and litigation support

The defined benefit (DB) pensions world is evolving. Potential conflicts between the funding needs of maturing schemes, investors and businesses under pressure from dynamic competitors and a rapidly changing macroeconomic environment will inevitably create disputes, some of which will require litigation to resolve. Meanwhile, high-profile business failures such as BHS and Carillion have dramatically shaken up the landscape for corporates with DB schemes, driving new powers and a more interventionist attitude – clearer, quicker, tougher – on the part of the Pensions Regulator.

Responding to a tougher regulator

As the Pensions Regulator becomes more active in exercising its powers and seeks to engage more extensively with trustees (and with criminal sanctions now coming into force), we are helping more and more trustees and sponsors to understand and respond to regulatory intervention – and ensure they stay on the right side of the line.

Independent, specialist support

  • We provide independent, expert support to sponsors, trustees, representative beneficiaries and other stakeholders involved in litigation or contentious circumstances.
  • We can help sponsors to assess the potential impact of events and, if appropriate, support them in negotiating with trustees to put in place adequate mitigation, take steps to establish the ‘statutory defence’ and/or to seek clearance. We can also help sponsors consider the risks associated with the Pensions Regulator’s new criminal powers and powers of investigation.
  • We can provide specialist support in the context of investigations by the Pensions Regulator, such as cases in which it exercises its ‘moral hazard’[1] (or ‘anti-avoidance’) powers or its power to impose a schedule of contributions on an employer where there has been a failure to agree. We can perform risk reviews and help you to assess the impact, or potential impact, of events in the context of the Pensions Regulator’s powers, and if relevant, to seek mitigation and interact with The Pensions Regulator.
  • We can assess the potential detriment to the pension scheme, calculate the ‘insufficiently resourced’ test, and analyse the ‘reasonableness’ of regulatory intervention.
  • We can provide support at any point in the litigation process, from the initial investigation into a potentially contentious matter, to independent critique of contemporaneous analysis and advice, expert advice and support in negotiations.
  • We can act as an independent expert witness for mediation, arbitration or litigation, and can be appointed as a ‘skilled person’ for the Pensions Regulator or any other regulatory body.
[1] The introduction of new Contribution Notice tests (Employer Insolvency and Employer Resources test) and criminal sanctions in the Pension Schemes Act 2021 have broadened the circumstances in which the Pensions Regulator can intervene and have significantly increased the potential penalties (to up to seven years in prison). The most likely outcome of a regulatory investigation is a negotiated settlement between the parties. However, if the Pensions Regulator decides to use its moral hazard powers, a Contribution Notice would require a direct contribution to the scheme, while a Financial Support Direction would require more general ‘financial support’ to be put in place for the scheme.

Expertise, independence and a wide-ranging skill set

  • As the market’s largest specialist covenant advisor, we have the expertise and gravitas to provide support in a wide range of circumstances.
  • We are also rarely conflicted and therefore ideally placed to act as an independent expert.
  • The unique skill set of our team means we can combine covenant, restructuring, corporate finance, investment and actuarial experience to provide holistic, expert advice.
  • We specialise in the most complex cases, including large multi-employer schemes in global groups; non-associated multi-employer schemes; regulatory powers and intervention; and distress and restructuring.