Hi Core reading mentions that one of the factors that influence the bulk TV paid by the Vendor's trustees is "whether the transaction would have a material impact on priority orders under the vendor's scheme in the event of a wind-up" Please could someone shed some light on this? I am not sure what the priority orders they refer to are, and how that impacts the amount of the bulk TV. Thanks.
Hi Mayowa The Core Reading here is referring primarily to the statutory priority order that may apply when a scheme starts to wind up. For example, in the UK, the level of benefits that would be provided by the Pension Protection Fund (PPF) has higher priority than benefits in excess of those that would be provided by the PPF. So, for example: Before a bulk transfer is paid a scheme may have sufficient assets on wind up to buy out: - 100% of the scheme members' PPF level of benefits, and - 70% of the scheme members' benefits in excess of the PPF level. When considering the bulk transfer amount, the trustees may wish to check whether the bulk transfer payment would materially change the proportions of each level of benefits that could be bought out on wind up. Sometimes a scheme's trust deed & rules will also specify a priority order of benefits that should apply on wind up - the trustees may wish to consider the impact on that priority order also. I hope that helps Gresham
