Final salary schemes offer businesses unexpected commercial protection

Brian Spence

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Firms seeking to fend off unwanted attention from aggressive suitors can find refuge in their final salary pension scheme.

Final salary pension schemes have always been seen as a fly in the ointment when it comes to selling a business, however they can be very useful at frightening off potential predators.

In these situations the added complexities of assessing the liabilities tied up in a final salary scheme and valuing them as part of an offer can be enough to ward off unwelcome advances.

Certainly most estimates of scheme liabilities, historically based upon FSR17 disclosures, are unlikely to be strong enough to satisfy any potential purchaser, while the involvement of scheme trustees will significantly complicate any negotiations.

However if firms are looking to sell, then there are things they can do to appropriately assess the liabilities involved and smooth the path towards a future deal. While a firm is happy with its current status, it may wish to avoid taking such action and enjoy the protection afforded by its final salary scheme.

For further details of the role a final salary scheme can play in any takeover negotiations, please see the Ace in the Hole article on the Spence & Partners website.

For further information please contact David Davison at Spence & Partners ( on 0141 331 1004.

Issued on behalf of Spence & Partners by Blueprint Media tel 0141 353 1515

Date: Sept ’08

Brian Spence

Post by Brian Spence

Fellow of the Institute and Faculty of Actuaries and Society of Actuaries in Ireland, scheme actuary, professional pension trustee