Pension scheme mergers and bulk transfers

Pension scheme mergers and bulk transfers

Where a company has more than one pension scheme there is often a desire to merge the schemes to simplify administration, and in particular to minimise duplication of costs - especially administrative and actuarial.

Companies may have more than one pension scheme either where executive scheme benefits have been provided from a separate scheme or where corporate activity has resulted in acquisition of companies with pension arrangements.

Scheme merger activity can be complicated, particularly where the benefit structures for members are different, or where there are special provisions applicable to different groups of members. 

The process is relatively document intensive, with requirements to notify members especially where the transfer will take place without their consent, as well as drafting the bulk transfer agreement itself. 

We have experience of advising the trustees of both transferring and receiving schemes in connection with such a bulk transfer.

Additionally, we can assist the sponsoring employer in planning and designing a scheme merger project. This decision is often driven by specific provisions around the powers and provisions in the documentation governing each scheme (in particular, relating to amendment, winding-up and payment of surplus monies to sponsoring employers).

Work highlights

  • Merger of four pension schemes into a new scheme
  • Bulk transfer of deferred members benefits from their old employer's scheme into a new pension scheme set up to receive the benefits