Restructuring defined benefit schemes

Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Practice notes

Restructuring defined benefit schemes

Produced in partnership with Wyn Derbyshire of gunnercooke LLP

Practice notes
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An employer may propose the restructuring of a Defined benefit pension scheme for a variety of reasons. These include:

  1. the need to ensure that the pension scheme complies with and properly reflects recent statutory and case law developments

  2. a desire to harmonise pension provision across the relevant corporate group, and

  3. a desire to control or minimise future pension Costs

Types of scheme restructuring

Common ways of restructuring defined benefit schemes include:

  1. changing the scheme’s Accrual rate for future service (eg from 1/60th of final salary for each year of pensionable service to 1/80th)

  2. changing from final salary to career average accrual rates

  3. pension scheme incentive exercises (eg an enhanced transfer exercise)

  4. closing the scheme to new entrants

  5. closing the scheme to future Accrual (with or without retaining a link to final salary)

  6. merging one or more schemes

  7. buying out members' benefits

For more information, see:

  1. Pension scheme incentive exercises

  2. Changing from final salary to career average accrual rates

  3. Scheme closure—overview

  4. Pension scheme mergers—considerations for employers and

Wyn Derbyshire
Wyn Derbyshire

Partner, gunnercooke LLP


Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.

He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.

Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.

He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also written several other books and numerous articles on a variety of legal and non-legal topics.

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Jurisdiction(s):
United Kingdom
Key definition:
Defined benefit definition
What does Defined benefit mean?

Benefits calculated by reference to a fixed formula, irrespective of the contributions paid or in-vestment performance.

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