Replay of Challenges for European Pension Funds in the Economic Downturn
Replay: Available until 1 January 2010
Date of Live Session: Tuesday 1 December 2009
The IPEBLA Teleconference Committee has assembled an expert panel of speakers who will address the topic, “Challenges for European Pension Funds in the Economic Downturn”.
This Teleconference will be conducted in English.
Corinne Merla & Elise Laeremans, Field Fisher Waterhouse LLP, Belgium
Kees-Pieter Dekker, Clifford Chance LLP, The Netherlands
Philip Bennett, Slaughter and May, UK
Nicolas Roessler, Mayer Brown LLP, Germany
Philip Smith, Arthur Cox, Ireland
Jens Lund Mosbek, Kromann Reumert, Denmark
This teleconference will look at some of the legal challenges facing defined benefit pension plans in Belgium, Germany, Ireland, The Netherlands and the United Kingdom in the economic downturn, together with some possible solutions.
For the funded defined benefit plans, the combination of:
• the reduction in long term interest rates,
• the fall in the value of plan investment,
• the increasing impact of improvements in longevity, and
• the cash flow constraints imposed on sponsoring employers by the economic downturn,.
have increased deficits and increased pressure on employers to funding those deficit at a time when employers are facing very difficult trading conditions
In the case of unfunded defined benefit pension plans, similar issues arise except that the focus on the financial strength of the sponsoring employer is considerably increased. However, unless a contractual trust arrangement (or equivalent security) has been put in place, the fall in plan asset values does not apply.
This challenging economic environment brings its additional legal challenges:
• Can steps be taken to reduce plan liabilities, for example
- by reducing or suspending future pension increases,
- by freezing or reducing pensionable pay,
- by reducing or removing discretionary practices (for example on early retirement without reduction where allowed),
- by reducing or suspending future service benefits,
- by reducing past service pension rights, or
- by increasing normal pension age.
For funded defined benefit pension plans, additional legal challenges include:
• to what extent does the pension plan management or trustee board have a legal obligation to ensure that the pension plan is fully funded either immediately or over a period of time?
• to what extent are sponsoring employers in relation to defined benefit pension plans able to walk away from pension plans by terminating their obligations to contribute to the pension plan?
The teleconference will run for 90 minutes altogether, which will include up to 20 minutes for questions and comments from delegates.
Replay available anytime up to 23:00EST 1 January 2010