The Pensions Regulator

Contingent assets

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What do trustees need to do before taking account of contingent assets?

28. The new scheme funding framework anticipates a partnership between the trustees and the employer. As part of this, trustees may need to bear in mind that the best means of delivering members' benefits is for the scheme to have the continued support of a viable employer. Therefore, if the employer is proposing to include contingent assets as part of the scheme's funding strategy, the trustees should understand the employer's reasoning for the proposal before accepting it.
29. The trustees should consider a number of different factors before accepting contingent assets as part of the scheme's funding strategy, including:
    • the size of the deficit in the scheme;
    • the value of the contingent asset to the scheme on the dates the contingent event could occur; and
    • the pace of funding being proposed.
30. The trustees will need to put in place a written agreement detailing how and when the contingent asset becomes payable to the scheme. As part of this process the trustees will need to seek specialist legal advice.
31. The following four sections expand on the points made in paragraphs 28 to 30 above.

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