Chapter 25 M&A - Bulk transfer query

[barney]

Hi,

I'm making my way through Chapter 25 and just looking for clarification on something...

According to the core reading:
Members involved in a bulk transfer have a legal right to individual transfers of the cash equivalent of their leaving service benefits.

According to the ActEd text:
There is no legal obligation for the sum of the cash equivalents to serve as a minimum bulk transfer amount.

So a member, as part of the bulk transfer, may be given less than the cash equivalent of their leaving service benefits. But if this is the case, members have the right to refuse to take part in the bulk transfer exercise and instead request an individual cash equivalent to be paid to the Purchaser's scheme??? Is this correct??

Thank u!

 

[Stuart Underwood]

M&a

Hi

You are right that in practice, a sensible minimum for a bulk transfer amount would be the sum of the individual transfer values. Otherwise, as you say, each individual member could transfer out of their original scheme and then in to the new employer's scheme, to improve its funding position.

However:

1. Members may be less interested in the size of the bulk transfer value if for example they know they will receive the same (defined) benefit in the receiving scheme.

2. The bulk transfer value is aggregated over many members. An individual may not know the size of the bulk transfer being passed across, and even if they do are probably very unlikely to know what their "share" of it is (to compare it with an individual transfer value).


Hope this helps

Best wishes
Stuart