Thousands of savers in a global healthcare company’s UK defined benefit (DB) scheme are now better protected after The Pensions Regulator (TPR) warned of enforcement action to secure increased financial support for the scheme.
A regulatory intervention report published today details how TPR worked with Sanofi and the scheme’s trustee to secure an improved guarantee package from the wider group, including substantial deficit repair contributions, additional protection of up to £730 million in the event of insolvency in the next 20 years, and an upfront payment of £37 million.
The Sanofi Section of the Sanofi Pension Scheme, which has 16,500 members, also benefits from an agreement, which is now legally binding, meaning that any dividend payments to the wider group paid by the scheme’s employers will be matched by contribution payments into the scheme.
Erica Carroll, TPR’s Director of Enforcement said: “This case demonstrates how productive negotiations can be carried out alongside our investigations so that the best possible outcome is achieved for savers.
“We signalled our intention to use our anti-avoidance powers which prompted Sanofi to engage in meaningful discussions with us and the scheme’s trustee.”
The report outlines how TPR opened an investigation in August 2019 following ongoing concerns about the progressively weakened direct covenant supporting the scheme after a number of group restructures over several years. While Sanofi had put in place a guarantee package to provide some additional financial support, it was not judged to be sufficient by TPR.
Following indications TPR intended to issue a Warning Notice seeking a Financial Support Direction, further settlement discussions led to an agreement which sees Sanofi’s commitment to the scheme significantly increased, which has in turn increased the likelihood of savers receiving their full benefits.
Notes for editors
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
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