Skip to main content

Your browser is out of date, and unable to use many of the features of this website

Please upgrade your browser.


This website requires cookies. Your browser currently has cookies disabled.

Sanofi Section of the Sanofi Pension Scheme - Regulatory intervention report

This report outlines how The Pensions Regulator (TPR) worked with Sanofi SA and the pension scheme trustees to reach a settlement that achieved the best possible outcome for members without the need for us to use our anti-avoidance powers. 

Published: 15 June 2021

Case summary

We considered using our anti-avoidance powers in this case because we had concerns about weakened direct employer support over several years. The wider group had provided a guarantee package, but in our view this did not fully satisfy the increased funding risks faced by the scheme due to the gradual erosion of the direct covenant.

We were preparing to issue a Warning Notice for Financial Support Directions (FSDs) when the group approached us and the trustee to discuss a further restructuring of the UK group and the potential settlement of our FSD case. Following negotiations between the targets of our regulatory action, the trustees and TPR, an agreement was reached that provides the pension scheme with enhanced financial support. This has, in our view, considerably increased the likelihood that members will receive their benefits in full.


The Sanofi Group is a global healthcare company and its parent company, Sanofi SA, is based in France. The current group has been formed over many years through a number of mergers and acquisitions which have required several restructures within the existing group companies and businesses. In 2019 it had revenues of around €36 billion and a market value of around €104 billion.

At the time of the investigation, there were several UK-based companies in the group, which include the remaining statutory employers of the Sanofi Section of the Sanofi Pension Scheme. As at 1 January 2018, the scheme had around 16,500 members, an ongoing funding deficit of £279 million and an estimated buyout deficit of £1,692 million.

The group restructures have meant that the statutory employers supporting the scheme have changed multiple times in the last few years, with some employers leaving the scheme and their businesses being adapted and moved to other parts of the group or disposed of to third parties. Some of these transactions resulted in significant dividends being paid to other companies within the group, and while the pension scheme had received some mitigation as a result of the restructures, the direct covenant supporting the scheme had weakened.

In addition, we were concerned that both the restructurings and intra-group financial arrangements put in place by the wider group, had introduced a significant degree of reliance by the statutory employers on inter-company balances. These balances were monies owed to them by other group companies so were not readily accessible to those employers.

We recognised that the wider group had provided some support to the scheme through deficit repair contributions, guarantees, and a non-legally binding dividend matching agreement introduced in 2015. However, we did not consider this to be sufficient to mitigate the risks to the scheme, in particular that the remaining employers would not be able to repair the deficit without additional support from the group.

Regulatory action

We had already been engaging with this scheme due to our concerns about the erosion of the covenant and the limited formal support being provided by the wider group to mitigate it. Our general approach is to encourage trustees and employers to work together to resolve issues before we formally intervene and, in this case, we gave them the opportunity to do so during the 2015 and 2018 scheme valuations (the second of which was completed in 2019). The financial support provided by the wider group improved as a result of these discussions, but not to a level that we considered to be sufficient to balance the growing risk.

In response to these concerns, we opened an investigation in August 2019 to explore whether we should seek FSDs from other entities within the group, including Sanofi SA. An FSD requires financial support to be put in place for a scheme over and above that provided by the scheme’s statutory employer(s). The target of the FSD initially has the flexibility to propose how they will support the scheme, and we will then consider whether this is reasonable in all the circumstances. If we conclude that the financial support proposed is insufficient we can then seek a contribution notice for a fixed amount.

Our investigation, which continued during 2020, focused on the relationship between the targets, the employers and the scheme, and the benefits received by the targets over approximately 10 years. We issued several section 72 notices requiring entities and individuals connected to the group to provide us with information, and also sought additional documentation from the scheme’s trustees.

As a result of our investigation, we concluded that we had a strong case for obtaining FSDs against targets within the group and we notified the targets of our intention to issue a Warning Notice.


In September 2020, the group approached us and the trustees about its plans for another organisational restructure that sought to rationalise the entities in the UK. Under the proposed restructure, some employers would leave the scheme. The group was keen to seek an agreement as part of this restructure which would both enable the trustees to support it, and also prompt us to bring the wider investigation to a close.

Negotiations subsequently took place between us, the group and the trustees, and in November 2020 a settlement was agreed which included:

  • a new guarantee package for the scheme from Sanofi SA. This guarantees a level of annual deficit repair contributions designed to ensure that the scheme becomes fully funded against a prudent long-term funding target, and additional protection of up to £730 million in the event of insolvency for roughly 20 years (by which time the scheme should be fully funded on a buy-out basis)
  • a legally binding agreement which means that any dividends paid to the wider group are matched by payments into the scheme for the same amount
  • an upfront payment into the scheme of £37 million

We believe that this settlement has considerably increased the likelihood that members will receive their benefits in full and is a good example of a global group meeting their responsibility for a UK-based scheme.

Our approach

The case demonstrates that we will work decisively with employers, trustees and the targets of our FSD powers to achieve the best possible outcome for members.

Meaningful settlement discussions can take place in parallel with our investigations, and we can achieve good outcomes without the need for us to use our anti-avoidance powers or incur the associated costs of a Determinations Panel process, and potentially an Upper Tribunal hearing.

We will consider all credible settlement proposals that meet our statutory objectives, which include the protection of members’ benefits in occupational pension schemes and the reduction of the risk of calls on the Pension Protection Fund.