The pensions aspects of acquisitions are taking an
increasingly central role as pension scheme deficits increase
and scheme trustees look to take security alongside more
traditional creditors. The Pensions Regulator may also take
action to require investors to contribute to a company's
pension scheme, even after exiting the business.
The Pensions Act 2004, which established the Regulator, and
the Pension Protection Fund (PPF), armed the Regulator with a
set of moral hazard powers. The powers were intended to allow
the Regulator to prevent companies from abandoning under-funded
pension schemes, leaving the PPF to pick up the shortfall.
The government is increasing the Regulator's powers in
reaction to what are perceived to be new ways in which
companies may try to cut their under-funded pension schemes
adrift. Concern has focused on disposals of sponsor company
assets and business models where a pension scheme is bought to
be to run for profit...