This document discusses whether company assets can provide inflation protection for pension schemes. It presents recent examples of UK companies that have used asset-backed structures and transfers of business assets to support pension funding. These transactions typically involve placing company assets in a special purpose vehicle, with the pension scheme receiving income from the assets and security over some of them. The document considers sources of inflation-linked assets on company balance sheets such as property, PFI contracts, inventory, brands, subsidiaries, and intellectual property that could potentially be used in this way.
1. Redington
13-15 Mallow Street
London EC1Y 8RD
T. 020 7250 3331
www.redington.co.uk
Can company assets provide inflation protection?
Jeremy Lee – Redington
2. 2
Funding pension schemes
Contingent assets
• Guarantees
• Security
• Escrow
• Letters of Credit
Asset-backed
• Priority of
cashflows
• Security over
assets
Business assets
• Direct transfer
Cash
4. Common features of recent asset-backed structures
Corporate
Pension scheme
SPV
1. Corporate places
asset in SPV
2. Income from asset
received by SPV
3. Scheme’s interest pays
income
4. Scheme also has security
over [some] assets in the SPV
4
5. Sources of inflation on the company balance sheet?
5
Property PFI contracts Inventory/stock
Brands Subsidiaries
Intellectual
Property