Sections

The Pensions Regulator

Regulatory guidance

Regulatory guidance

AbandonmentAbandonment of defined benefit pension schemes

Structure of trustee board

  1. While discussion and negotiation on any proposed abandonment arrangement is ongoing, trustees should critically examine the make-up of the trustee board and any potential and actual conflicts that exist for individual members of the trustee board.
  2. These conflicts are expected to include (but are not limited to):
    • a company-nominated trustee who is in conflict between the interests of the company proposing the arrangement and the members’ interests;
    • a member-nominated trustee who may be in conflict between their own interests and the interests of other members; and
    • a member- or company-nominated trustee who is an employee of the company and may be in conflict between their interests as an employee and their interests as a member and trustee of the scheme.
  3. Our clearance guidance provides guidelines to trustees on conflicts of interest and managing these conflicts during any negotiations. More information on this and other possible conflicts of interests can be found in our consultation document.

    In particular, if any trustees identify an actual conflict it is appropriate that they are not directly involved in any decision taken by the trustee board on the arrangement.
  4. If there are potential conflicts, trustees should put processes and
    mechanisms in place to manage and communicate these conflicts.
  5. It is expected that if the arrangement goes through, the new employer group may look to change the composition of the future trustee board. Trustees should consider whether it is appropriate for the trustees to control any change in the structure of the board if the arrangement goes ahead. The aim of any such change would be to prevent the employer from having undue influence on the executive management of the pension scheme in the future.
  6. If any proposal provides the employer with undue influence, trustees
    should consider resisting agreeing to the arrangement.