September 23, 2019

September 20, 2019

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Tata Steel and Proposed Changes to UK Pensions Legislation- Watching Brief for Insolvency World

Over the past few months, we have commented on the steel industry crisis and some of the employment law issues arising from it in the context of insolvency. UK Government recently proposed to assist the British Steel Pension Scheme and its struggling principal employer Tata Steel, one of its primary aims being to avoid entry into the PPF by reducing increases to members’ benefits to the statutory minimum (but which would ultimately see those members better off). Such changes would usually require member consents, which logistically and/or conceptually can present real difficulties.

Fire, FightersInsolvency practitioners should be aware of this potentially changing landscape. If measures putting more control into the hands of pension trustees are implemented and schemes have a better chance of avoiding being wound up then it may assist a few companies to trade through financial difficulties.

For those insolvency practitioners advising on a company’s financial position before a formal insolvency and appraising any restructuring options or improvements to the financial covenant, there may be value in considering if trustees of the pension scheme can implement measures which are not only in the best interests of members but might also help the company as well.

However, as matters stand the Government is only considering implementing special dispensation for large (100,000 member plus) schemes whilst leaving other (equally deserving) schemes without the same tools to manage underfunding issues.

Now is the time to consider a statutory override across the board to allow trustees to implement measures which can help members get a better overall deal; an override which in our view may also add another dimension to the restructuring landscape.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Mark Prior, Squire Patton Boggs, Manchester, Restructuring, Insolvency
Senior Associate

Mark is a senior associate in our Restructuring & Insolvency practice based in our Manchester office. 

His particular expertise covers commercial and legal issues involved in corporate recovery, turnaround and reconstruction, and insolvency law. Mark advises on all formal insolvency processes and has considerable experience in preparing and negotiating legal documentation for the sale or purchase of businesses and assets, and distressed property portfolios. Mark has also advised directors on trading and prepared several cases for court...

44 161 830 5266
Catherine McKenna, Pension Attorney, Squire Patton Boggs Law Firm
Partner

Catherine McKenna leads our Pensions practice group . Her particular expertise is in providing advice to companies and trustees on all aspects of pensions law, including advice on managing pension risk and developing creative solutions to assist with funding shortfalls. She deals with pension plan restructuring, governance, and the pensions issues arising on corporate activity. Catherine also specialises in Pension Regulator applications and intervention, pension disputes and negotiating all types of pension fund investment management, custody and other third party agreements.

+44 113 284 7045