Defined Benefit (DB) pension plans can have a large influence on corporate transactions, being both high risk and high profile from a financial perspective.
Pension underfunding can become a major pricing issue in a M&A situation, resulting in costs becoming volatile and subject to rapid and material change. Complex rules govern the trigger of statutory payments to UK pension schemes, and regulators (including the UK pension regulator) may seek financial mitigation.
A DB pension scheme is most likely to be an employees’ most valuable benefit and often their most significant source of lifetime savings, meaning, pension matters can often be a significant employee relations and reputational matter in transactions.
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Read more about the pensions implications of M&A for finance teams