19 Aug 2020

Case study: supporting pension scheme trustees to meet challenging deadlines

This employer went through a significant amount of corporate activity, requiring extensive negotiation and interaction with its pension scheme trustees. With the sale of a subsidiary and the subsequent takeover of the remaining business, the trustees had to hold discussions with the acquiring organisation concerning:

future funding arrangements
the implications for the sponsor covenant
the nature of any additional financial support that might be available.

In the end, an agreement was reached to provide incremental financial security to the pension scheme – but logistics didn’t make it easy.

Making it happen

One big difficulty was negotiations had to happen within very tight timescales and each involved numerous trustee, sub-committee and adviser meetings. Knowing documents would come through late in the day for discussion at 9am the following morning, it was clear their existing paper-based approach would simply no longer work.

A new way of working to meet the challenging deadlines was needed, as was ensuring confidentiality was maintained so listing rules regarding disclosure of information were not breached.

Using an electronic meeting pack system meant:

documents for each meeting could be loaded and viewed immediately
attendees would be notified electronically
all historic documents, papers and deeds were readily available and fully searchable for easy reference during any meeting
security settings for each individual enabled access to specific documents, maintaining confidentiality where needed, but the status could be changed instantly if needed during a meeting.

To keep the negotiations and legal processes moving, rapid turnaround was needed for meeting minutes. These were distilled to key facts, actions and owners. These were loaded on to the system quickly for review by the chair and then to all other attendees within 24 hours.

The outcome

The online meeting portal proved to be a very quick way of securely disseminating information to a widely scattered group of directors, trustees and advisers. Despite having to learn to use the new system very quickly, everyone loved the interface and found it easy to use.

In addition to ensuring sale and acquisition projects can be managed efficiently, the system has also improved ongoing management of the pension scheme. For example, when accounts needed to be signed, the final document is circulated through the portal so it can be read ahead of a meeting the next day.

Financial security has improved

Achieving enhanced security was the primary focus for the pension scheme trustees. Combining the significant cash contribution and contingent asset payments achieved during the negotiations with investment out-performance and other factors has led to a significant improvement in the scheme’s funding position. Along with a guarantee from the new parent company, this has all led to the financial security of the scheme being materially better than it has been for several years.

The outlook is positive

Following the acquisition, the relationship between the scheme and its sponsoring employer remains positive, with the company continuing to support the scheme. The trustees are confident the scheme is well positioned to pay the pensions promised to its members.

This article us provided by Punter Southall Governance Services.