The regulatory amendments drawn up by the Secretary of State for Work and Pensions following the outcome in Trustees of Olympic Airlines SA Pension & Life Assurance Scheme v Olympic Airlines SA have been drafted narrowly and may end up  protecting no one other than the beneficiaries of the Olympic Airlines pension scheme. 

The issue

Summary. The Pensions Regulator (the Regulator) has issued a statement on regulated apportionment arrangements (RAA) and employer insolvency (the statement).

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:

The Court of Appeal has ordered a reference to the Court of Justice of the European Union (ECJ) in Grenville Holden Hampshire v the Board of the Pension Protection Fund which involves a pension scheme member, whose early retirement pension was reduced by two-thirds on the scheme's entry to the PPF, arguing that the statutory cap on compensation payable by the PPF does not give full effect to Article 8 of the EU Insolvency Directive.

The story of the restructuring of carpet-maker, Brintons has featured in the press recently, with emphasis on the role of Carlyle, one of the world's biggest private equity firms. The facts are similar to the Silentnight pre-pack which we featured in a previous bulletin. In each case, the Pensions Regulator is said to be considering using its anti-avoidance powers under the Pensions Act 2004 to compel senior debt holders to pay towards the deficit of the defined benefit pension scheme operated by the company.

The story of the Silentnight restructuring has featured in the press today. There have been calls for the Pensions Regulator to use its anti-avoidance powers under the Pensions Act 2004 to compel HIG Europe to pay more towards the considerable deficit of the Silentnight Pension Scheme, following the purchase of Silentnight out of administration by the private equity firm last Saturday. Earlier this year, Silentnight had failed to obtain the PPF's approval to a Creditors Voluntary Arrangement aimed at addressing its historic debt, including a pensions deficit of around £100m.

Gleave and others v The Board of the Pension Protection Fund [2008] EWHC 1099 (Ch)

The High Court ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.

[2008] EWHC 1099 (Ch)

The High Court has ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.