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Occupational Pensions: Federal Labour Court rules on applicable discount rate regarding the determination of the amount of claims asserted by the German Pension Insolvency Protection Association (PSV)

The Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled on 18 May 2021 (docket number 3 AZR 317/20) that in the case of the PSV’s assertion of claims against the insolvency administrator of an insolvent company, it is not the balance sheet interest rate used for the calculation of the pension provisions that is applicable, but the standard statutory interest rate according to section 246 German Civil Code (BGB). Only this interest rate is decisive for the calculation of the amount of claims.

Facts / Background:

Germany, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, DLA Piper
Occupational Pensions: Federal Labour Court confirms its established ruling on limited liability in case of acquiring a company out of insolvency

By judgment of 26 January 2021 (docket number: 3 AZR 878/16, 3 AZR 878/17) the Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled that the acquirer of an insolvent company is only liable for vested entitlements and claims to occupational pension that had been earned after the opening of insolvency proceedings. He is not liable for the pension based on periods before, even if the German Insolvency Protection Fund (PSV) does not fully cover this part of the pension.

Facts / Background:

Germany, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, DLA Piper
What is Changing in the Pensions Insolvency World? Introducing the Corporate Insolvency and Governance Act 2020

The Corporate Insolvency and Governance Act 2020 is far-reaching with its implications extending to pension schemes. Pension scheme employers and trustees should ensure that they are familiar with the provisions of the Act, and the potential impact that they could have on schemes, employers and savers.

Introduction

The Act received royal assent on Thursday 25 June. The Act passed through Parliament very quickly, so that its provisions can be used by companies experiencing financial difficulty as a result of the COVID-19 pandemic. The Act contains:

United Kingdom, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Mayer Brown, Corporate governance, Coronavirus, Pension Protection Fund
The UK Corporate Insolvency and Governance Act 2020 (“CIGA”) from a Pensions Perspective

On 25 June 2020, the Corporate Insolvency and Governance Bill (the “Bill”) received Royal Assent and on 26 June 2020 CIGA came into force. The restructuring team in Mayer Brown’s London office has previously commented on the different elements of the Bill in a series of blog posts and podcasts.

United Kingdom, Employee Benefits & Pensions, Insolvency & Restructuring, Mayer Brown, Coronavirus, Pension Protection Fund
The Nortel and Lehman Brothers companies

Background

Under the Pensions Act 2004 the Pensions Regulator (tPR) has the power to impose a financial support direction (FSD) requiring a company “connected or associated” with the sponsoring employer of a UK pension fund to provide financial support to the pension fund. To date tPR has used the power in insolvencies.

United Kingdom, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Dentons, Debt, The Pensions Regulator (UK), Lehman Brothers, Pensions Act 2004 (UK)
UK pensions: summer round-up

This summer has seen several pension issues making the news. They show how essential it is for employers and trustees to keep abreast of how developments impact on their arrangements.

Jay Doraisamy looks at five areas which have made the headlines this summer:

United Kingdom, Corporate Finance/M&A, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Tax, Dentons