Background

The trustees of a pension scheme were advised that the shareholders of the scheme’s sponsoring company were in the process of selling to a private equity investor in a leveraged disposal. A report prepared by advisers to the company was submitted to the trustees, which identified that the disposal transaction would adversely impact the scheme, and offered a sum in settlement of the assessed level of detriment.

Action

The trustees appointed FRP to assist them in negotiations with the company, and to assess whether the level of settlement offered was acceptable.

Outcome

The review of the available information, carried out by our Pensions Advisory team, showed that the basis of the mitigation settlement was challengeable and that the amount required by the trustees needed to be at least 50% greater than the original offer. After a period of robust negotiation, during which FRP assisted the trustees, the company finally agreed to increase the settlement to the level required.