The Pensions Regulator

AbandonmentAbandonment of defined benefit pension schemes

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Factors trustees should take into account

21. The overriding message of this guidance is that trustees' starting point in considering any arrangement that results in abandonment of the scheme (or a part of the scheme) should be that it may not be in the best interests of members. Trustees should therefore apply a high level of scrutiny to any proposed arrangement.
22. Trustees will need to carry out due diligence in deciding whether the arrangement results in abandonment of their scheme in their circumstances. In carrying out due diligence, it is expected that trustees will consider a number of factors before rejecting or agreeing to any proposed arrangement. Arrangements involving abandonment, by their nature, are expected to create value by removing some risk and creating certainty for the parties involved through what can be achieved with the pension scheme.
23. Trustees will need to carry out appropriate, commensurate and rigorous due diligence to make sure that the proposals are in members' best interests. The regulator expects trustees to consider the factors set out in this guidance when they evaluate a proposed abandonment arrangement.
24. The factors highlighted on the following pages are expected to be reasonably comprehensive, but this does not remove trustees' responsibility to consider any other factors that may be relevant. Trustees will need to satisfy themselves that their review of the proposed arrangement is comprehensive.

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