Business Restructuring/Insolvency Advice

Insolvency and restructuring create specific issues with regard to pension schemes, especially defined benefit pension schemes.

Recent changes in legislation and the introduction of the Pension Protection Fund (PPF) have significantly improved the degree of projection for members when an employer goes out of business.

However, transferring schemes into the PPF is complicated and the transition process needs to be properly managed with appropriate coordination between all parties involved including trustees, members, the PPF and the insolvency practitioner.

Where employers remain solvent but undergo some restructuring, this will often have significant impact on pension benefits. Typically, this will mean altering or even stopping the future provision of defined benefits and/or the introduction of alternative arrangements.

This creates a number of issues, not least:

  • who retains responsibility for properly funding past service entitlements
  • the nature of any ongoing provision
  • what benefits are targeted and how this impacts on members’ expectations
  • what benefits are to be provided for current employees on death in service.


The key to the success of any restructuring of pension benefits is effective communication both with members, particularly where benefits are being reduced going forward and also the trustees of any defined benefit scheme who will need to ensure that, even in the event of scheme closure, benefits built up to date are properly protected and funded for.