TPR secures £730m insolvency protection for Sanofi Pension Scheme

Sanofi’s defined benefit (DB) pension scheme has additional insolvency protection of up to £730m for 20 years, following intervention from The Pensions Regulator (TPR).

The regulator worked with the global healthcare company to secure the increased financial support for the scheme, which also includes deficit repair contributions and an upfront payment of £37m, after warning that it would take enforcement action if necessary.

TPR added that the scheme, which has 16,500 members, now also benefits from a legally binding agreement which states that any dividend payments to the wider group paid by the scheme’s employers will be matched by contribution payments into the scheme.

The creation of this arrangement follows the regulator opening an investigation in August 2019 due to concerns that the scheme’s covenant had been weakened by a series of group restructures.

TPR determined that the guarantee package put in place by Sanofi was not sufficient and stated that, before it came to the new agreement with the healthcare company, it had intended to issue a Warning Notice seeking a Financial Support Direction.

Instead, Sanofi, which had revenues of around €36bn and a market value of around €104bn in 2019, approached TPR and the scheme’s trustee in order to discuss further restructuring of its UK operations.

The regulator’s report into the investigation stated that it believed the settlement had “considerably increased the likelihood that members will receive their benefits in full and is a good example of a global group meeting their responsibility for a UK-based scheme”.

TPR director of enforcement, Erica Carroll, said: “This case demonstrates how productive negotiations can be carried out alongside our investigations so that the best possible outcome is achieved for savers.

“We signalled our intention to use our anti-avoidance powers which prompted Sanofi to engage in meaningful discussions with us and the scheme’s trustee.”

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