Insights and Analysis

The Pensions Regulator's new powers: what lenders need to know

02 February 2021

Following the insolvencies of Carillion and BHS and the associated fallout for the pension schemes they sponsored, the Pensions Regulator (tPR) announced it was going to be "clearer, quicker and tougher". The Pension Schemes Bill (the Bill), soon to receive Royal Assent, will give tPR significant new powers to intervene where the security of defined benefit (DB) pensions may be at risk. These new powers include an expansion of the moral hazard powers and an extension of the 'notifiable events' framework It also creates new criminal offences and liability for civil fines of up to £1m.

Lenders to corporate groups with DB schemes should understand the potential impact that the new provisions could have for structuring lending and on a borrowers' ability to agree to changes to its capital structure or grant new credit support in the context of a restructuring. The changes proposed through the Bill have potential for a material impact on financial restructurings and will certainly not make things easier for stakeholders looking to restructure groups with DB schemes. The scope of the new offences is wide and lenders should take careful advice to ensure transactions are structured in a way so as not to draw the attention of tPR on themselves.

Our new briefing note explains the potential impact that the new provisions could have for structuring lending and on a borrowers' ability to agree to changes to its capital structure or grant new credit support in the context of a restructuring.