The item you have requested is not currently available in English and you have been redirected to the next available page. You may use your browser's back button to return to the item you were viewing.
Country desks feature Dentons lawyers in one jurisdiction with a particular focus or experience in another jurisdiction.
Learn more about our Canada capabilities
Learn more about our United States capabilities
Learn more about our Latin America and the Caribbean capabilities
Learn more about our Europe capabilities
Learn more about our United Kingdom capabilities
Learn more about our Central and Eastern Europe capabilities
Learn more about our Russia, CIS and the Caucasus capabilities
Learn more about our Africa capabilities
Learn more about our Middle East capabilities
Learn more about our Central Asia capabilities
Learn more about our China capabilities
Learn more about our Asia Pacific capabilities
Learn more about our Australia capabilities
At Dentons, we bring together top tier talent found at the intersection of geography, industry knowledge and substantive legal expertise. Start by clicking here
Lexpert recognizes 27 Dentons lawyers as "Canada’s Leading Energy Lawyers”
Dentons is proud to congratulate an outstanding 27 lawyers who are listed as “Canada’s Leading Energy Lawyers” by Lexpert, in its recent special edition on Energy.
Venture Capital fund managers may begin operations in record time in Singapore
Although a venture capital fund may be prepared to invest in a new country, lengthy requirements to set up operations may risk the loss of valuable business opportunities.
IRS issues cost of living adjustments to retirement plan limits
The IRS has just issued the cost of living adjustments for various retirement plan limitations that will take effect either on January 1, 2018, or for the 2018 plan year.
Parallel debt structures in South Africa
Bridging the gap between English law, international market practice and South African law.
Three Key Things to Consider on Motions to Disqualify
Motions to disqualify can have the effect of distracting attorneys from their full devotion to their client’s claims or defenses.
Starting your career as a student at Dentons exposes you to a world of experience and opportunities
With 125+ locations in 50+ countries, Dentons is home to top-tier talent that is found at the intersection of geography, industry knowledge and substantive legal experience. Working with Dentons, you will have the opportunity to learn from the best lawyers in the industry at the largest law firm in the world.
Dentons wins EuropaProperty’s CEE Investment & Green Building "Law Firm of the Year" Award for the seventh time in a row
Dentons won the "Law Firm of the Year" award at the 7th annual CEE Investment & Green Building Awards ceremony organized by EuropaProperty.
Dentons is recognized as a leading financial law firm in this year’s IFLR1000 guide
Dentons is pleased to announce that 11 of our lawyers have been ranked in this year’s IFLR1000, the guide to the world's leading financial and corporate law firms and lawyers, two of whom are receiving this honour for the first time..
Dentons wins Diversity Law Firm of the Year in Australia
Dentons’ diversity achievements have again been recognised with the Firm awarded Diversity Law Firm of the Year at the Lawyers Weekly Women in Law Awards 2017.
Pension scheme assets can rise and fall. So can liabilities. The timing of the section 75 debt calculation is, therefore, critically important to the ability of the scheme to meet its liabilities.
So when should trustees calculate their section 75 debt? Can they use one date to calculate scheme assets and choose a different date to calculate the cost of buying out the scheme’s liabilities?
In BESTrustees plc v. Kaupthing Singer & Friedlander Ltd  EWHC 629 (Ch);  WLR (D) 84 the High Court declared that the “applicable time” for calculating an employer’s section 75 debt is the date of the insolvency event triggering that debt. Therefore both the value of the scheme assets and the cost of buying out liabilities must be assessed on the same date.
Kaupthing Singer & Friedlander Limited entered administration on 8 October 2008. This triggered a section 75 debt in relation to the Singer & Friedlander Limited Pension and Assurance Scheme (the Scheme). As at October 2008 the section 75 debt was estimated to be about £73.9 million. At the much later date when the actuary certified the section 75 debt, it was over £140 million. The administrators claimed that the date of the administration was the appropriate date for determining the amount of the section 75 debt.
BESTrustees plc, as trustee of the Scheme, asked the High Court for a declaration as to the proper construction of regulation 5 of the Occupational Pension Schemes (Employer Debt) Regulations 2005 (the Employer Debt Regulations) in force on 8 October 2008.
The trustee accepted that under regulation 5 of the Employer Debt Regulations the value of pension scheme assets should be assessed on the date of administration. It argued, however, that the cost of buying annuities should be assessed using the date on which the scheme actuary actually calculates scheme liabilities. This was because these calculations usually took a considerable time to prepare and the assessment should take account of movements (up or down) in the annuities market in that period.
The employer submitted:
Sales J looked at the legislative framework, construing the Employer Debt Regulations as a coherent whole as at the relevant date (8 October 2008). He considered the statutory context, noting that section 75(4)(a) Pensions Act 1995 indicates that there is to be a focus on the value of the assets and liabilities of the scheme at a single common point in time.
He gave weight to the actuarial principle requiring consistency of calculation of assets and liabilities when calculating a scheme deficit. He accepted that there was evidence that all actuaries who calculate section 75 debts do so using one date, that date being the “applicable time”.
He concluded that there was no ambiguity in regulation 5 of the Employer Debt Regulations, noting that regulation 5(3) expressly requires “assets of the scheme to be valued” and “the amount of the liabilities” to be determined and calculated “by reference to the same date”.
He said he would make a declaratory order to affirm the employer’s interpretation of regulation 5 of the Employer Debt Regulations.
Unsurprisingly, Sales J did not have any difficulty in accepting the employer’s argument in this case. He also referred to the difficulty insolvency practitioners would have if the trustee’s view prevailed because they need to be able to assess assets and liabilities promptly and make distributions to creditors as speedily as possible. The difference in the amount of the section 75 debt at the two dates was probably the main reason for this matter being before a court at all.
The case serves as a lesson for trustees who have a section 75 claim following the insolvency of an employer to ensure that any estimate of the section 75 debt they put to an administrator is not unreasonably understated. It also emphasises the problem trustees in this situation face in that annuity rates may rise before the section 75 debt is certified so they are unable in winding up the scheme to buy out members’ entitlements in full.
For further information on the issues covered by this note, please contact Elmer Doonan or your usual Dentons contact.
The URL of this tweet is below. Copy it to easily share with friends.
Add this Tweet to your website by copying the code below. Learn more