Enhanced Transfer Value meaning

On 22 May 2024, the Kingdom of Spain sent a letter to the appellate body, replying to a 20 May 2024 submission to the court from Dutch subsidiaries of US-based NextEra Energy Inc and Luxembourg-based 9REN Holding SARL. Those companies seek to enforce arbitral awards against Spain with a combined value of approximately €359.3m (roughly US$386m). Spain, meanwhile, asks the DC Circuit to deny enforcement, contending that the arbitration clause in the multilateral Energy Charter Treaty (ECT) does not apply to intra-European Union disputes between EU Member States and European investors. Spain’s letter notes: ‘Spain and the EU have legally committed themselves to achieving carbon neutrality by 2050.’ It adds: ‘As the European Commission has observed, the Energy Charter Treaty (a 1990s agreement to develop fossil-fuel resources in the former Soviet bloc) is no longer compatible with the EU’s enhanced climate ambition.’ For example, the letter explains that the ECT requires signatories to facilitate the transit of energy products such as coal, natural gas and crude oil, and also...

Defined benefit (DB) pension scheme deficit A defined benefit (DB) pension scheme is in deficit when the value of its assets falls short of its liabilities. There are several ways to assess the shortfall, for example: on the scheme funding basis — required by the Occupational Pension Schemes (Scheme Funding) Regulations 2005, SI 2005/3377, and used to determine future contributions. If a shortfall is identified on this basis, the trustees and sponsoring employer must agree a recovery plan to clear it. For further information, see Practice Note: The scheme-specific funding regime — Recovery plan on a solvency basis — liabilities measured as the premium an insurer would need to secure the scheme benefits in full (the ‘buy-out basis’) on the Pension Protection Fund (PPF) basis — assets and liabilities valued using standard assumptions and the benefit structure set by the PPF on an accounting basis — assets and liabilities measured as required by an accounting standard For further information,...

A-day 'A-day' is the widely used term for the broad pension tax 'simplification' reforms that began on 6 April 2006. The changes covered: how much pension contribution was allowed, the kinds of schemes an individual could invest in, the sums that could be taken (and when), and the choices available for any remaining fund. A-day also introduced the annual allowance and the (now abolished) lifetime allowance. See: Annual allowance and Lifetime allowance. AFPS AFPS: Armed forces pension scheme; see Practice Note: Public sector pensions and family proceedings. Accrual rate The speed at which pension benefits build as pensionable service is completed in a final salary scheme, eg 1/60 for each year of pensionable service. Accrued benefits The benefits earned in respect of service up to a specified date. Added years Extra pension provided by adding further years of pensionable service in a salary-related scheme. Such additional years are secured via transfer payments or through additional voluntary contributions/augmentation...

THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES Recent years have seen more defined benefit occupational pension schemes fall into deficit, and sponsoring employers and trustees have shown heightened interest in ways to manage, and preferably reduce, the financial risks and investment swings linked to these arrangements—a process typically termed ‘de-risking’. A range of de-risking approaches exists, and further options continue to be developed. These methods are directed at managing exposure to financial risk and investment volatility tied to such schemes. Among them are incentive exercises, including enhanced transfer value exercises and pension increase exchange exercises, which are treated as part of the de-risking toolkit—an arsenal available to employers and trustees of defined benefit schemes (for more information on incentive exercises, see Practice Note: Pension scheme incentive exercises). Increasingly, however, de-risking strategies are turning to insurance solutions, with pension buy-outs and pension buy-ins being the most prevalent choices. Before proceeding with a buy-in or buy-out, the Pensions Regulator advises trustees to obtain specialist advice and, where...