The Pensions Regulator

AbandonmentAbandonment of defined benefit pension schemes

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Scheme investment strategy

58. Trustees should consider the impact of the proposed arrangement on the appropriate investment strategy for the scheme assets.
59. Following the reduction in or removal of the employer covenant, the scheme would have lost an important backstop to protect it against investment risks. It is expected that the investment strategy should reflect the increased exposure of the scheme and the limited protection that it has against these risks.
60. This will interact with any mitigation provided to the scheme as part of the arrangement and the need to consider the technical provisions. It may be that the appropriate investment strategy with a nominal employer prevents the opportunity to achieve the funding of the appropriate technical provisions. This would be a strong argument for trustees not agreeing to the arrangement.

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