Merging a number of pension schemes can make things a lot easier to administer. If you're an employer looking to consolidate, get in touch today.

Do Pitmans' Merging Pension Schemes Lawyers Have Any Particular Areas of Expertise?

Pension schemes, especially final salary schemes, are often merged when an employer group operates more than one scheme for different employees and wishes to rationalise its pension arrangements. There can be considerable time and cost savings to the employer in administering one merged scheme and appointing one set of professional advisers, and from the winding-up of the transferring scheme.

The usual proposal is for a bulk transfer of all the assets and liabilities of the transferring scheme to be made to the receiving scheme without members’ consent being sought. All active, pensioner and deferred pensioner members of the transferring scheme will continue to enjoy the same benefits and terms as to payment of those benefits following the merger. The rules of the receiving scheme will be amended to facilitate this. Indeed, an entirely new scheme is sometimes established if none of the existing schemes are appropriate to act as receiving scheme. See also Trust Deed and Rules.

We have considerable expertise in this area and we will act for either employers or trustees. The issues to consider include:

  • Trustees of the receiving and transferring schemes to have legal advice
  • Check the transfer rules of the transferring and receiving schemes to ensure that the employer and trustees have all appropriate powers to implement the transfer
  • Terms and conditions of the merger to be contained in a merger deed between the employers and trustees of the transferring and receiving schemes
  • Transferring scheme actuary to certify that transfer credits provided for each transferring member are broadly no less favourable than the rights being transferred

Trustees of both schemes should consider:

(a)        Their duties in considering the merger proposal

(b)        Conflicts of interest, e.g. common trustee or employer representatives on the trustee boards of both schemes, common advisers

(c)        Funding and security of both schemes and combined funding post-merger with any material difference in funding levels being removed eg by payment of special contributions or having a segregated section for the transferring scheme, or providing a contingent asset

(d)        Comparative balance of powers, i.e. considering any special trustee or employer powers that are present in one scheme but not the other

(e)        Regulatory approval

(f)         Communications with members

Ensure that no section 75 debt is triggered as a consequence of the merger by making the transfer take place before the winding up of the transferring scheme is triggered.

See also Trustees’ Powers and Duties, Section 75 Debt and Winding-up Pension Schemes.

Why Choose Pitmans' Merging Pension Schemes Lawyers? 

Pitmans’ Merging Pension Schemes lawyers can:

  • Advise on all legal aspects of the merger as listed above
  • Draft merger deed
  • Draft amending documents needed to facilitate the merger
  • Assist with asset transfer, e.g. by deed of assignment