Corporate restructuring: don’t miss out on a big opportunity
By Malcolm Goodwin, Head of Business Solutions Aviva
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Restructuring can be a big deal for SMEs, with banks, lawyers and accountants often involved in the process. It can also prove a major opportunity for financial advisers who focus on pensions and workplace benefits.
In a recent survey, 58% of respondents had seen an increase in the number of employers seeking to agree a pensions deal on a company restructuring over the past 12 months*
With no sign of this activity declining in 2018, now is a great time as a financial adviser to forge a reputation for being involved in corporate restructuring.
I’ve found that reviewing pension arrangements tends to go hand-in-hand with restructuring. At a time of considerable change, financial advisers could be a big help to employers who aren’t fully up to speed with the benefits which other workplace pension schemes could offer them.
A restructure might be a change of ownership, a buy out, merger or de-merger, an acquisition, repositioning or financial/debt restructuring. Whichever type of restructure you’re looking at, workplace pension and benefits schemes may come under the microscope.
Corporate Protection policies will often be required as a condition of the restructure. These will range from Loan Cover, Key Man Assurance and Shareholder Covers and can include not only Life Cover but often Critical Illness and PHI as well.
Even if pensions and protection aren’t topics which the executives of the company are actively considering, a restructure may be the perfect time for you to introduce them to a wider range of options than they may have previously considered.
And don’t forget another opportunity which can arise on the back of a restructure: you’ll have the chance to form new connections with other professionals such as accountants or lawyers.
The opportunities which restructuring offers to advisers aren’t limited to larger corporates – SME clients too have the potential to generate significant work for your business.
So where do the opportunities come from?
- If a new legal entity is being set up, the ‘new’ workforce will need to be auto-enrolled into a workplace pension scheme within six weeks.
- There will almost certainly be at least one workplace pension scheme already in place – or two in the case of a merger.
- If there’s a Defined Benefits scheme, the Pensions Regulator will need to be involved. They will need to make sure that final salary scheme liabilities are being met – see the TPR website for more information on this.
- The employers being restructured will almost certainly have been through auto enrolment themselves. An adviser will be needed to certify that all existing parties have fully complied with auto enrolment, on an ongoing basis. This includes duties such as managing opt-outs, ongoing assessments, re-enrolment and record-keeping.
- In time, there may also be the chance to look at the Employee Benefits packages on offer.
Should the company move to a new pension scheme?
Restructuring is an ideal opportunity to review the suitability of any existing scheme. You could help the employer to also consider:
- Is the SME fully complying with all the auto enrolment legislation?
- Is the SME struggling with poor admin or outdated legacy platforms from their existing workplace pension scheme provider?
- Could the SME’s workplace pension scheme be more efficient in terms of service, communication options or integration with payroll?
- Did the SME carry out solid due diligence at the time they took out their workplace pension?
- How engaged are the employees in their pension scheme?
- What’s the investment performance and capital security of the SME’s current workplace pension scheme like?
Find out more about Aviva’s workplace pension at Aviva.co.uk/business.
*Taylor Wessing Pensions in Restructuring Survey 2017