Pension trustees support

Our specialist Valuations team are able to support pension trustees in a number of different areas, including:

Non-cash funding solutions
Many companies are looking to directly or indirectly fund their pension scheme with non-cash assets such as real estate, intangible assets, shares in unlisted companies or rights to income secured on these assets.

By using non-cash assets companies can meet trustees’ requests for better scheme security without diverting additional cash from the business. A key question for both companies and pension scheme trustees is what value should be placed on these non-cash assets, especially when the valuation of the asset is complicated by contingent clauses in the agreements. 

Our team has significant experience of valuing these types of asset and can play an independent expert valuer role, reporting jointly to the company and to the trustees.

Covenant support
In addition, the strength of an employer covenant is a key concern of pension trustees when considering that employer's ability to support its pension scheme. Group restructurings and asset transfers can impact covenants to the enhancement or detriment of the pension scheme. 

Our specialist team can advise on the value implications of any changes and how they have impacted the employer covenant.

Financial support directions
Lastly, the UK Pensions Regulator is making increasing use of its anti-avoidance powers to ensure that employers support their defined benefit pension schemes in a meaningful way. One of those powers involves the issuing of a Financial Support Direction ("FSD"). In order to issue an FSD, the Regulator needs to show that the scheme employer is "insufficiently resourced" and that there are associated or connected companies which have sufficient resources to support the pension scheme. Our team have recently worked on the UK's largest FSD case and can advise trustees and companies on the valuation requirements of the FSD test.

Contact us if

  • you require an independent review of the value of non-cash assets in order to reach agreement between the company and the trustees
  • you require a valuation of non-cash assets for tax or accounting purposes
  • you want to understand the value of any collateral provided to the pension scheme, where the asset is an income stream from a financial instrument
  • you want to understand how the value of an employer has been impacted by restructuring or other changes in the employer's business
  • you want to understand whether your business is at risk of being targeted by an FSD
  • you want to understand whether an FSD might be an option which could be used in support of the pension scheme

How we can support you

Non-cash funding solutions

We can provide an independent valuation service to the company, the trustees, or both parties jointly in their assessment of the valuation of non-cash assets. Our valuation analysis and report can be used in support of commercial negotiations between the parties and can also support valuation requirements for tax and accounting purposes.

Our extensive experience of working with companies and trustees will ensure that valuation related issues are identified early in the process and the positions of all relevant stakeholders are considered.

Where valuations involve complex contingencies we have the technical skills required to reflect this and can explain our treatment in a way which is clear and transparent. This is particularly important when the valuations may be scrutinised by auditors, tax authorities and regulators.

Covenant reviews

How we can support you is best illustrated with an example. Imagine that one asset on an employers' balance sheet is exchanged with another group asset as part of an internal reorganisation. It is unlikely that any market prices exist for the transferred assets, but we can advise the trustees and the company as to the value implications of any changes and what that is likely to mean for the strength of the employer covenant.

Financial support directions

Determining whether an employer is "insufficiently resourced" or not can be a complex process involving a number of stages. Our experienced team can take you through the required steps and help you to assess whether this key test is satisfied or not. This would involve assessing the value of the resources of both the employer company and the associated companies in its group.

If you have made your own assessment of the valuations required for the "insufficiently resourced" test we can act as valuation experts in any determinations panel hearing organised by the Pensions Regulator.