mast image

Impact Investing

IPE special report May 2018

Sections

PwC points to 'other ways' to collect pensions money from overseas companies

Related images

  • PwC points to 'other ways' to collect pensions money from overseas companies

UK – The UK regulator could find other ways to enforce the collection of pension debt backed by insolvent overseas companies if a "crucial" Supreme Court ruling does not find in favour of pension funds, PwC has predicted.

Speaking as the UK's highest court conducted a three-day hearing on the ranking of financial support directions (FSDs) – the method by which the Pensions Regulator (TPR) has sought to collect more than £2.2bn (€2.6bn) from Lehman Brothers and Nortel Networks over pension fund deficits – PwC partner Jonathon Land said that even if the court found in favour of the companies, it would not leave TPR unable to collect debt from insolvent overseas companies.

"There are other ways to enforce collection overseas," he told IPE. "But clearly it would not be helpful if the court ruled against [the funds]."

He noted that other countries, such as the US, currently had the ability to ensure outstanding payments to pension funds ranked above other creditors upon insolvency – a ranking that has been disputed in UK courts by Lehman and Nortel.

Land said the Supreme Court would have three options to consider – whether FSDs ranked ahead of other creditors, was equal with others or should be deemed less important upon insolvency.

He warned that the last option would result in a "black hole", with any pension funds unlikely to receive any assets upon insolvency.

"The ranking of FSDs has remained a key area of contention over the past few years," he added.

"The final ruling could have a significant impact on the ways in which pension schemes look to safeguard themselves against insolvency situations."

He warned that the impact of the ruling would be "far reaching", and that a ruling finding FSDs senior to other creditors would strengthen the regulator's ability to fund pension schemes in deficit following insolvency.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2435

    Asset class: CLOs.
    Asset region: Global.
    Size: USD 50m.
    Closing date: 2018-05-22.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

Begin Your Search Here