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ERM for Pension Funds [32]

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Bullet points include: Last resort benefit reductions. If there is no-one else able and willing to meet shortfalls then any scheme winding up (or being forced by regulators or courts to wind-up) with a deficit will necessarily reduce some ‘promised’ benefits to reflect lack of assets to pay them in full. This type of last resort benefit reduction would usually be excluded from consideration of conditional benefit structures in a HBS. Aim is never to have recourse to this legal back-stop. However, identifying boundaries between conditional benefits and constructive obligations may be challenging in some instances

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