Pensions due diligence in share sales—issues specific to DB schemes

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Pensions due diligence in share sales—issues specific to DB schemes
  • Due diligence and DB schemes—key issues
  • Target's status in the DB scheme
  • Is the DB scheme closed or open to future accrual?
  • Contributions payable
  • Compliance issues, claims and disputes
  • Scheme funding issues
  • Where DB scheme follows target to buyer's group post-completion
  • Where DB scheme remains in seller's group post-completion
  • Was the DB scheme contracted-out prior to 6 April 2016?
  • More...

Pensions due diligence in share sales—issues specific to DB schemes

THIS PRACTICE NOTE APPLIES IN RELATION TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES

This Practice Note considers the due diligence issues to look out for in a share sale, where the target company participates in a defined benefit (DB) scheme. In this Practice Note, references to the 'target company' include the subsidiaries of the target company (since they also transfer to the buyer's group on a share sale).

For an overview of the pensions aspects of due diligence in a share sale, see Practice Note: Pensions due diligence in share sales—an introduction.

For a detailed review of the due diligence issues which arise where the target company participates in, or contributes to, a defined contribution (DC) pension arrangement, see Practice Note: Pensions due diligence in share sales—issues specific to DC schemes.

Due diligence and DB schemes—key issues

Where the target company participates in a defined benefit (DB) pension scheme, there are numerous pension issues to consider.

In most cases the DB scheme will remain in the seller's group. However it is possible (albeit quite unusual) for the buyer to contemplate allowing a DB scheme to follow the target company on its transfer to the buyer's group. In both cases due diligence on the scheme is necessary, but in cases where the DB scheme follows the target to the buyer's group, then additional

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