Unless you have been hiding in an igloo in Antarctica for the last year you could not possibly have missed the media furore over the huge pension liabilities of eminent companies that have become insolvent. BHS, a venerable British retailer, is the most high profile after recently entering administration with an estimated pensions deficit of £571m.
Whilst a parliamentary committee investigates the relationship between former management, owners and other stakeholders potentially responsible for the BHS collapse, our colleagues, Kevin Burge and Felix Weston have published an article in Practical Law which provides a timely and very useful overview of the issues that must be considered in a company’s insolvency where there is an occupational pension scheme.
Given the current financial climate and number of spiralling pension scheme deficits, the pension scheme of a company is likely to be one of the company’s largest creditors. It is therefore critical that pensions issues are carefully assessed and managed before, during and after insolvency. The article provides a high level summary of the insolvency legislation in the UK, its influence on insolvency procedures and the issues to be considered, including the trustees’ duties, the role and responsibilities of insolvency practitioners and scheme administrators and their interaction with the PPF before, during and after insolvency.
The article also covers the effects of insolvency on an individual, including what will happen to that individual’s pension in bankruptcy and the circumstances in which the Trustee in Bankruptcy may be entitled to access the individual’s pension for the benefit of their insolvent estate.
