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Asset Backed Contributions (ABCs)

Using corporate assets to provide efficient funding to pension schemes

For many pension schemes, the continuing fall in gilt yields over recent years has led to increased funding deficits. With new pensions funding legislation and guidance on the horizon, the Pensions Regulator (“tPR”) is also directing trustees and companies to agree long-term funding targets.

As a result, many companies could be facing increased demands from trustees for cash or other forms of funding/protection to meet these increased deficits and/or help achieve these long-term targets. This comes at a time when many companies are trying to reduce costs in their business.

A solution to balance the needs of both the company and the trustees may be Asset Backed Contributions (ABCs).

ABCs utilise group assets (e.g. property, brand, loan notes, receivables, stock) and can provide a means of immediately funding a significant amount of pension deficit, whilst preserving corporate cashflow and reducing the risk of overfunding the pension scheme.

More information on ABCs can be found in the attached flyer.

Deloitte is the market leader for ABCs, having designed and implemented over 30 structures to fund over £4bn of pension deficit.

If you would like to discuss this topic or pension scheme funding more generally, then please do get in touch.

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