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.

TPR's supervisory expectations and approach relating to protection of pension schemes during merger and acquisition transactions 

Thursday 7 December 2023

Nausicaa Delfas, Chief Executive of The Pensions Regulator (TPR) speech at the UK Finance Corporate Finance Committee dinner.

Key messages

  • TPR’s priorities are to protect, enhance and innovate in savers’ interests.
  • Our focus on defined benefit (DB) schemes is on making sure they pay their promised benefit.
  • We are not here to prevent mergers and acquisitions (M&A) transactions – but are here to make sure savers’ interests are protected.
  • Pension schemes should be treated equitably alongside other creditors.
  • Early engagement between the corporates and the trustees and regulators can make sure that transactions proceed smoothly. 


Hello everyone, I am Nausicaa Delfas, and since April of this year, the Chief Executive of the Pensions Regulator.

Thank you for inviting me here this evening to talk about pensions, and specifically about how the regulator engages with schemes and businesses during M&A transactions.

Pensions are at a moment of significant change – where we are moving from a one-scheme, one employer environment to a marketplace of schemes and providers competing for business.

I am sure that you will have seen in amongst a raft of other announcements in the Autumn Statement – a significant package of reform measures for pensions.

We are very supportive of the government’s agenda to deliver better outcomes for pension savers through consolidation in savers’ interests, raising standards of trusteeship, and solving the most difficult challenge in finance, how to support savers in turning a pension savings pot into a retirement income.

It is clear to me that across both DB and defined contribution (DC) pensions we are now all on a journey towards, fewer, larger, well run pension schemes - schemes with the scale and expertise to invest in a broad range of diversified assets and bring about service innovation.

It is my firm belief that this will help to deliver better outcomes for savers.


Since I took on this role, my vision is that as a regulator we need to focus on three key areas – protecting savers money, helping to enhance the pensions system and supporting innovation in the interests of savers.

I see our role as a regulator to be part of the solution in a changing landscape, with the interests of pensions savers at our heart.

Taking each in turn:

First, to protect savers’ money by making sure trustees and employers comply with their duties

We should not forget that TPR was set up in response to corporate events through which savers lost their retirement incomes.

In DB schemes, our role is to make sure schemes are well run, well governed, and funded appropriately so that schemes pay their promised benefit and that savers do not have to rely on the safety net of the Pensions Protection Fund.

In DC schemes, our role is to ensure that employers pay their contributions, that schemes are well governed, and administered, and that they deliver value for savers.

Second, to enhance the system through effective market oversight, influencing better practices

While protecting savers’ money will always be paramount, as pension provision shifts towards a genuine market, with consolidator schemes competing for business, our role will be to take a market-wide view, foster competition and encourage delivery of ever greater outcomes for savers.

Third, to support innovation in savers’ interests so that new products and services deliver good outcomes

In DC pensions, people are faced with incredibly complex choices about how to support themselves in retirement.

We want to encourage the market to provide a suite of value for money products and services that work for different savers and different retirements, guiding savers toward the right solutions for them.

New forms of pension provision also continue to reach the market and just recently we saw the first scheme transfer into a new pensions superfund – a vehicle to allow the consolidation of DB pension schemes.

Our role will be to make sure that any new market entrants are secure with savers’ interests at their heart.

TPR’s interest in M&A

Turning now to our role in M&A and the approach we take.

Our interest is in protecting pensions savers’ interests.

Many of those companies you may be engaging with have DB pension provision – whether that’s one of the fewer than 10% of schemes still open to new members or the majority which are closed schemes looking to make good their pension promises.

A DB pension scheme is one where the employer agrees to provide a set income in retirement and bears the risk of delivery of that pension promise.

We regulate more than 5,000 private sector DB schemes, with around 10m memberships and £1.4 trillion in assets.

And for a variety of reasons, schemes are currently very well-funded – in fact the best they have been for at least 15 years.

We estimate that as of September over 80% of schemes are in surplus on their technical provisions compared to around 50% at the start of 2022. And over half of all DB schemes may have sufficient funds to buy out their liabilities with insurance companies, should they choose to do so.

With corporates/employers on the hook for these schemes, this improved funding position of pensions may make businesses more attractive to M&A activity.

As a regulator when it comes to M&A activity, we are not here to prevent transactions – we are here to make sure savers’ interests are protected.

For example, ensuring that the pension scheme is treated equitably alongside other creditors.

And that mitigations are provided so that the scheme does not suffer detriment from risks such as: increased debt within the group, the direct loss of part, or all, of a sponsoring employer, or granting of security to other creditors ahead of the scheme.

Trustees are the first line of defence for scheme members, but we expect outgoing and incoming executive management teams to support trustees to implement a robust funding plan.

This should be underpinned by cash and or tangible security with proven value, which ensures members’ benefits will be paid in full, on time and when contractually due.

Where M&A activity takes place without mitigating against potential harms to the scheme, we consider that to be avoidance.

We have a number of anti-avoidance powers including Financial Support Directions and Contribution Notices.

In 2021 these were built on by the Pension Schemes Act 2021 to make them easier to use, with higher fines and even criminal powers.

There was some concern within the industry around our criminal powers when they came into force, as they are broad – they can be used against any person (it does not need to be the employer or someone connected and associated to the employer, as is the case with a Contribution Notice).

In response, we published a policy on this. In summary, we would only look to use our criminal powers in the most egregious cases.

Preventing use of our powers

So how could businesses ensure we do not use our anti-avoidance powers?

Companies should engage from the outset of any M&A activity with trustees, and always treat the scheme fairly with other creditors.

The government has committed to extending the type of events that trustees and employers must notify TPR about under the Notifiable Events Regime.

They consulted on draft regulations, which included a requirement that employers must notify TPR about M&A activity and included that a declaration of intent must be sent to both TPR and trustees.

Government will bring forward final regulations in due course, but regardless of this, early engagement from corporates with both trustees and the regulator is key to ensuring a successful outcome in M&A activity.

In the meantime, we would expect that the trustee reaches out to us. And we talk directly to employers, group companies, third-party purchasers and banks.

We can respond quickly to meet commercial deadlines through this process and will assess transactions where there is material detriment to the scheme, and to ensure there are appropriate mitigations in place.

We also monitor market activity and proactively engage where we think there could be a risk to pension savers. Often that is where there are companies in distress but increasingly in relation to general M&A activity. Our Intelligence team gather market intelligence, whistleblower reports, and information from other agencies, like HMRC or the insolvency service, sharing information between us where we have appropriate gateways.

Both trustees and TPR are subject to strict confidentiality provisions – so market sensitivity should not be seen as a barrier to engaging with trustees or with us.

But solutions should not be presented as a done deal. Instead, you should keep us updated as details of the deal emerges.

We are a risk-based and proportionate regulator. If trustees are receiving the information they need, have the required level of experience and advisory support, and are taking a robust approach in defending scheme members’ interests – it is unlikely we will intervene.

But if that is not the case, and savers’ hard earned retirement incomes are threatened – we will intervene.

First through supervision, where we will look to resolve risks consensually without the use of powers.

But if agreement can’t be reached, then escalating that engagement to an enforcement case.

Using our powers is a last resort.

Our goal is always to try and reach constructive solutions with both the trustee and the corporate.

If corporates want extra assurance that we will not use our anti-avoidance powers in the future, they can also approach us for clearance on a transaction. This is a voluntary process but can provide comfort to corporates that they won’t face any nasty surprises.

A clearance statement gives assurance that, based on the information provided, we will not use our powers to issue a contribution notice, a financial support direction, or both (depending on the scope of the clearance statement), in relation to particular event. Events include transactions, agreements, decisions, other acts and failures to act, set out in our guidance as “type A” events.


So, what is it that management teams can do to ensure that we are satisfied in any M&A activity?

First, they should provide trustees with direct access to the bidder at the earliest opportunity.

This allows trustees to set out any liabilities and begin the negotiating process for the protection of savers.

Second, corporates should ensure that any M&A activity is backed with a well-thought-out business plan which considers the scheme’s long-term funding objectives and how they will ensure the scheme stays protected.

Third, corporates should stay true to their word. If trustees and TPR agree an acceptable arrangement, it should not be watered down after the transaction has taken place. If that were to happen, we could take further action, including considering the use of powers again if required.


So, to conclude, we are not in the business of slowing down M&A transactions unnecessarily, provided savers’ interests are met.

We want schemes to be treated equitably and early engagement in the process will give the best chance that agreement can be gained all round.

Our focus is on ensuring that pensions savers’ benefits are protected.

Thank you.


Share this page

  • Facebook
  • Linked In
  • Twitter