Details are starting to emerge of the likely approach to be taken by The Pensions Regulator in providing clearance (or otherwise) for corporate transactions after 6th April this year. The position is by no means clear and ultimately it will be how real cases are actually dealt with that give us a true picture. We have prepared below a briefing note on some of the points emerging and we expect to be closely involved in many of the early cases.

In essence the key test will be one that shows that the pension creditor (measured at this stage as an FRS17 debt) is not weakened in its security by the transaction - or if there is a weakening some other advantageous change takes place. An example might be a weakening of security (if some sale proceeds are paid to shareholders) but a special payment to the scheme is also made.

Our particular concern for buyers of businesses is the unknown position on any future sale of the business - will clearance be available on similar terms at that time, or does the exit plan (for example to a more leveraged purchaser) create potential problems.

Please click here to read more on the Pensions Regulator's anti-avoidance powers or contact Paul Geeson on 020 7533 1872 or David Cule on 020 7533 1871 for further information.