Herbert Smith played a key role in ensuring the employees of tube contractor Metronet did not miss out on pension benefits when the company went into administration.
Partner Roderick Morton advised Metronet and Transport for London (TfL), which stepped in to take responsibility for the pension scheme until a new contractor is found.
Morton explained that when the company went into PPP administration its pension scheme automatically entered a pension protection fund (PPF) assessment period.
“The assessment period is the process under which the PPF works out if the scheme is eligible for assistance and whether it has sufficient funds to cover its liabilities,” said Morton. “It usually takes 18 months to work that out, but in the meantime all benefits are cut back to PPF levels.”
That means contributions from employers and employees stop and members no longer accrue benefits. Death benefits also stop, meaning a spouse would not receive any payout if the member died.
A new contractor will take over the pension once the administration is complete, but that could take some time. To ensure members continued to receive benefits a scheme rescue package was put in place.
“A scheme only goes into the PPF if no one is responsible for it,” said Morton. “TfL stepped in to take full responsibility until a new contractor comes along. That allowed all the benefits to restart.”
Partners Ian Pittaway, Pauline Sibbitt and Claire Altman of Sacker & Partners represented the pension scheme trustees.
Administrator Alan Bloom was represented by Allen & Overy partners Derek Sloan and Maria Stimpson, and associate Chris Jackson.