UK - Industry figures have backed calls for companies involved in mergers and acquisitions to disclose their intention for the target company pension scheme prior to the deal.
The National Association of Pension Funds - whose members operate almost 1,200 pension schemes with combined assets of about £800bn - said the Takeover Panel should recognise that pension fund trustees are a relevant representative of employees and the future of the fund is a relevant interest of the employees.
This comes after representatives of some of the UK's largest workplace schemes responded to the Takeover Panel's consultation on its City Code on takeovers and mergers - which contains provisions on the position of employees in takeover activity - saying companies should make clear their intentions for the target pension scheme in offer documents sent out by an acquiring company.
NAPF head of corporate governance David Paterson said: "The position of the these employees financial interests would be materially strengthened by requiring an offeror to disclose its intentions regarding the pension scheme, including the impact of the offer and associated financing on the scheme and a negative statement if it has no intentions and no impact is expected.
"In particular, we believe that pension fund trustees should have information rights and be able to rely on the statements made by offerors."
Law Debenture Pension Trustees has written to the panel urging it to ensure companies looking to acquire or bid for a takeover make disclosures about the future of the target scheme.
Law Debenture pensions director Mark Ashworth (pictured) said: "We believe the interests and positions of schemes can be affected very significantly by takeovers and that should be considered in the disclosure documentation.
"I don't think it should stop M&A activity but I don't think anyone would argue for M&A activity that weakens the position and security of pension scheme members."
Among the proposals set out in Law Debenture's letter are that disclosure should be in the offer documents a company sends out when it is taking over another; the acquiring company should set out its intentions for the scheme and the impact of the takeover and be bound by the statements it made; the company being taken over should also give its views on the interest of the schemes; and trustees should have a right to express an opinion.
If agreement could not be reached it is a matter that should be referred to The Pensions Regulator, Ashworth added.
At present companies can optionally seek clearance from The Pensions Regulator over plans for the pension scheme following a takeover.
A TPR spokesman said: "We encourage all parties associated to a transaction which affects a defined benefit scheme to understand the potential impact this may have on the continued delivery of retirement promises. Any mechanisms which further increase the transparency of such transactions would benefit pension schemes and their members."
Society of Pension Consultants president Kevin LeGrand said there should be a requirement at the very least to disclose what a company plans to do in relation to the scheme post takeover, particularly on the brink of a big growth in M&A activity.
However, he added it was difficult to achieve a balance of interests between various parties involved.
LeGrand said: "You have to allow companies flexibility to make changes or you will stifle business but if at the least they are required to make a meaningful public statement as part of the documentation for the takeover it would force them to make it more likely to try and adhere to what they said."
However, BDO partner Alex White said setting out formal documents on how an offer will affect a pension scheme and its members proves a fundamental risk to the UK M&A market.
"There is currently nothing stopping the board of an offeree wanting to understand the impact of a deal on the pension fund, without requiring the offeror to respond to disclosure rules. What may be considered reasonable requirements from stakeholders, will, if codified result in a barrier to M&A and a more drawn out process," he said.
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