In all cases, it is advisable to perform a due diligence investigation, for which many checklists can be found online. Unfortunately, the issue of pensions can be overlooked or explanations limited to checks on potential under-financing of a plan and the assumptions in connection with the funding strategy. However, this will not be sufficient. The entirety of the arrangements must be in order. It is evident that this specialist area is far too complex to be captured in a checklist.
An all-inclusive view
Will the acquisition lead to employees leaving the company? What financial arrangements have been made with regard to the administration of the pension scheme? Do these arrangements satisfy the requirements arising from tax legislation? Has the scheme been assessed for compliance with the regulations regarding sectoral pension funds? Unless you are familiar with all the aspects, expensive surprises could, in a few years’ time, tarnish a deal that seemed brilliant at the time.
In the course of a due diligence investigation, we will investigate elements such as:
- What does the scheme involve?
- How has the administration of the scheme been set up?
- How long has the contract been running for and when will it expire?
- Does the total funding of the scheme add up?
- Are there any additional risks that must be taken into account?
Why you should investigate a pension scheme
Even the smallest mistake in a pension scheme can lead to major financial implications. After all, when it comes to pensions law, the amounts involved are significant. Including the pension scheme as part of a due diligence investigation prevents a scenario that leaves you picking up the pieces over several years as a result of one slip-up. If the investigation highlights a flaw, we are often able to address this in time. and in any case before the acquisition is finalised.
Through a rapid and in-depth analysis, legal specialists at Bergamin Pensioenrechtadvies will bring to light any issues in connection with the pension scheme. We do not merely review the contents of the documentation; we also look at what is missing. We are fully aware of the financial implications, thanks to our grasp of the subject matter and solid background. This is a strength that few other legal specialists in the area of pensions law can claim.
In the case of an acquisition, it is always advisable to commission a due diligence investigation into the pension scheme. Small flaws can have a major financial impact. That is why you should speak to a professional partner.