This information is provided for educational purposes only and does not constitute legal advice. It is recommended to seek specific professional advice before acting on the information provided. © Shoosmiths LLP 2022. Compensation paid by the schemes during the pension protection fund assessment period has been subject to legal review, with a Labour Court ruling possibly prohibiting the limitation of benefits paid during that period, the lawyers said. This information is provided for informational purposes only and should not be considered a substitute for obtaining legal advice. Please see the full terms and conditions on our website. Whether your EU supplier certification authorities have exclusive or non-exclusive choice of jurisdiction clauses, it is important that trustees ensure that their certification authorities are properly enforceable after Brexit. This will likely involve obtaining legal advice and opinions from qualified lawyers in the relevant jurisdiction: we were asked whether trustees would need to obtain further legal advice in order to recertify contingent assets for the year 2021/22. Indeed, the legal regime for the enforcement of English judgments in EU member states changed after the end of the Brexit transition period. However, schemes wishing to certify a guarantee if the guarantor is established in an EU or EFTA country (Switzerland, Iceland, Norway and Liechtenstein) should consider whether an updated legal opinion is needed.
PPF guidelines state that “a new or revised formal legal opinion is generally not required, but trustees should provide one if they believe that the legal situation has changed since the initial notice was issued, such that trustees may be prevented from submitting relevant attestations on the exchange unless: the notice is updated.” As the certifier must confirm that the guarantee is “a legally binding, valid and enforceable obligation of the guarantor(s)”, updated legal advice would be required, unless the trustees have already received legal advice specifically on post-Brexit enforcement issues. If you want to recertify a CA provided by an EU-based company, the PPF (as recently pointed out on its website here) wants to make sure a claim against the provider is possible – and the PPF said that could mean getting a new opinion from your relevant EU lawyers to include in your recertification model. While recertifying an existing FPP-compliant guarantee is a relatively straightforward process, some of the PPF requirements for new Type A guarantees also apply to recertification. Trustees must report an amount that they have reasonable grounds to believe could be met by the guarantor(s) (what the PPF calls a recoverable collection). As part of this requirement, and prior to certification or recertification, trustees must now have conducted appropriate research on the financial situation of the guarantor(s) and have considered the likely impact of the immediate insolvency of employers on the plan on that financial situation. The declared recoverable recovery does not exceed any financial ceiling within the guarantee itself. PPF has issued guidelines in this regard. We believe that it will be necessary for directors to carefully review the position and at least maintain an audit trail of decisions made and information reviewed. They may also need to seek appropriate advice from the Alliance.
New guidance has been issued for CBAs setting out PPF recertification requirements, with ABC certification required for the first time last year to achieve tax savings. The good news is that PPF does not require trustees to obtain a new legal opinion (only to obtain confirmation that there have been no relevant changes that would alter that opinion), but trustees must obtain a new valuation of the CBA to certify the lower of fair value and its encumbered insolvency value. However, the Hague Convention applies only to judgments given on the basis of exclusive jurisdiction clauses.