Overview

The downturn in the British economy will affect many sponsoring employers of UK occupational
pension funds. Many trustees of final salary pension funds are asking their advisers if there is
anything that they can do to improve or protect their position in the event that the worst happens
and the sponsoring employer becomes insolvent.

One of the first things to consider is an amendment to the rules to clarify that the employer’s powers vest in the trustees on insolvency. Normally when a sponsoring employer gets into serious trouble, an insolvency practitioner will be appointed and in certain cases will exercise the sponsoring employer’s powers under the trust deed and rules. By amending the rules, trustees may be able to avoid this potentially undesirable situation.

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