The PPF — the restructuring and insolvency approach

If an employer becomes insolvent and it has a defined-benefit (DB) pension scheme in deficit, the Pension Protection Fund (PPF), the statutory body established to compensate members in such circumstances, will act as a creditor on behalf of the scheme to maximise recovery from the employer.

Pension schemes can only enter the PPF if its sponsoring employer suffers an insolvency. However, sometimes, an employer that is facing insolvency — and has a scheme in deficit — can strike a deal with the PPF that will see it take on responsibility for the scheme, leaving the employer to continue trading.

The PPF’s role in recent high-profile cases has received a lot of scrutiny. The fund has recently published a fact sheet that summarises the conditions that need to be met before it will consider entering into such deals. Broadly, it has advised that the following conditions will need to be met…

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