Busy with retirement: S&W’s new hire helping clients find fresh solutions for pensions

Tom Partridge joined S&W as a Partner earlier this month. Formerly with Teneo, he’s worked with sponsoring companies and trustees of some of the country’s biggest pension schemes. He was also previously seconded to the Pensions Regulator’s scheme funding team. He now leads S&W’s pension restructuring practice in London.  

I trained at BDO and then moved to Deloitte, where I became a Partner in its restructuring team before it was bought by Teneo. My career in restructuring really coincided with the creation of the Pensions Regulator and the introduction of new laws on pensions funding, which meant these issues had to be considered much more seriously.  

DB pension schemes are often a sizable creditor of the business, and the board, scheme trustees, creditors and others need to understand that liability and the company’s capability to meet it.  

In all sorts of situations. I’ve provided employer covenant assessments, monitoring and event-driven advice on valuations, acquisitions, refinancing and demergers for employers and trustees across a wide range of sectors: from financial services to aviation. I advised on the then largest buy-in transaction in 2023 and worked with some of the country’s largest pension schemes and their sponsoring employers when their businesses ground to a halt due to Covid.  

We do a lot of work on mergers and acquisitions, but many situations can see us called in. Any sort of stress or distress for the employer or related restructuring, in particular, can trigger a need for specialist advice, because most pension schemes still depend on their employers. Nearly half of the country’s schemes still have a deficit on a solvency basis: if their employers become insolvent, there may not be sufficient assets to meet the full benefits promised to members.  

That’s why it’s important that S&W’s pension advisory practice sits within the restructuring and insolvency team. Insolvency analysis is an important part of the work we do – understanding the situation in the worst-case scenario. 

One of the interesting things about working in this area is that it’s always evolving. One big change in recent years has been that a lot of schemes have improved their funding positions. Many are now looking seriously at their end game, but that’s changing, too.  

It might be an insurance transaction, like a buy-in or buy-out, as it has been traditionally, but there are new options schemes need to think about as well. There are now multiple authorised pension superfund consolidators, for instance. More trustees and employers are also thinking about continuing to run on the scheme themselves. If you’ve got a strong enough company supporting the scheme, it doesn’t have to finish with an insurance transaction. You can cut the overall cost of providing members’ pensions because you’re not paying a premium to an insurer. 

As schemes mature, they can invest in less risky assets and reduce the volatility underwritten by the business. For some, there’s the potential to build up a surplus that can ultimately return to the sponsor or be used to enhance member benefits. Part of the Pension Schemes Bill going through Parliament at the moment is designed to make it easier for trustees to return surpluses.  

As a result, we’re seeing some companies transition from viewing their scheme simply as a liability to seeing it as a potential asset. But to do that, you have to be able to demonstrate you’ve got a strong enough business to underwrite the potential volatility. That’s where we get involved.  

Funding levels have improved, but the options are constantly changing. Besides, many schemes still have deficits on a solvency basis. Even if they’re quite well funded on an ongoing basis, an event like restructuring or an M&A will mean stakeholders have to be very careful not to harm the scheme’s position. They must still navigate the same legislation, and they still face the same penalties and consequences for getting it wrong, which include criminal offences.  

The regulatory landscape is also changing. There’s a new funding code for triannual scheme valuations, for instance, and for schemes that are less well funded, it is prompting different conversations. We’ve also seen cyber security become an increasingly high-profile risk, both for sponsoring employers and the schemes themselves, which hold vast amounts of personal data. 

In all these areas, clients need advisers who understand these issues and have the capabilities to help them navigate them effectively. The issues we deal with are often multifaceted. You might need a valuations expert for collateral, a cyber expert, corporate finance specialists – as well as pensions experts. That’s why S&W’s full service capability is so important.  

There’s still £1.2 trillion in assets in defined benefit schemes, and nearly 5,000 of them across the country. With pensions, there’s a lot of work to do.