When a company is sold, it's important to take care of any pensions issues. Contact us for clear, comprehensive legal advice.

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On the sale of a company, both the seller and buyer will need to consider any pensions issues that arise. Buyers will want to obtain as much information about the target company's pension arrangements as possible, especially where final salary schemes are concerned. Trustees will need advice to ensure their members are not adversely affected by the sale.

Due diligence

The following documentation will need to be reviewed:

  • Copies of governing documentation.
  • Copies of booklets and announcements given to members
  • Copies of the latest actuarial valuation
  • Membership data, including details of age, current salary and length of service
  • Details of statutory employers
  • Details of contribution levels by members and the company
  • Details of scheme investments
  • Copies of agreements between the trustees and third parties
  • Copies of scheme accounts and trustee reports for the last three years
  • Copy of latest scheme return
  • Confirmation that the scheme is registered with HMRC
  • Confirmation of whether the scheme is contracted out
  • If the scheme is or has been multi-employer, details of any section 75 debts and how these were dealt with
  • Details of any practice of discretionary benefits being granted to members
  • Details of compliance with the Pensions Act 1995 and the Pensions Act 2004
  • Details of any complaints which have been lodged with the company or trustees
  • Copies of any correspondence between the trustees or company and any regulatory authority (in particular the Pensions Regulator)
  • Confirmation that the target company does not participate in any cross-border pension scheme
  • Details of the seller's compliance with the auto-enrolment employer obligations

Warranties

The buyer will usually require the seller to warrant certain information regarding the pension scheme. The following is a typical list of warranties:

  • All relevant information has been disclosed
  • The scheme is registered with HMRC
  • The scheme has been operated in accordance with its governing documentation and all other laws and regulations
  • There are no claims that have been threatened against the trustees or company in relation to the scheme
  • All contributions due have been paid
  • All discrimination laws (particularly sex and age) have been complied with
  • No section 75 debts have been triggered
  • All expenses have been paid
  • The scheme has not been the subject of any report to the Regulator of intervention from the Regulator
  • The seller has complied with all of its obligations in respect of its automatic enrolment duties under the Pensions Act 2008

Why choose Pitmans' Due Diligence and Pension Warranties lawyers?

Pitmans’ Due Diligence and Pension Warranties lawyers can:

  • Provide advice on all aspects of the due diligence process and undertake the due diligence work
  • Draft appropriate warranties
  • Draft agreements to record any special terms regarding pensions agreed between the buyer/seller/trustees.