The paper considers defined benefit (DB) pension debt in the UK. Private company, not public sector, DB pension scheme debts are considered from the perspective –

• Of the post April 2005 regulatory regime and enforcement powers;

•Of the interaction of funding and security;

•Of investment return, investment risk and investment variation or volatility;

•Of an advising actuary and a decision making pension scheme trustee;

•Of the necessary corporate finance or employer covenant advice.

The major drivers behind the paper are the interaction of (1) heroic investment returns and risk, (2) commercial debt management issues and (3) the inevitable idiosyncrasies of each sponsor and pension scheme. When pension debts become unmanageable, the trustee options and powers, corporate reconstruction and regulatory powers and influences also need to be examined. The background to the situation can be easily summarised with reference to legislation, regulators and  industry bodies. The various parties involved and their responsibilities, conflicts of interest and typical attitudes and actions will be highlighted. Stakeholders include society/tax payers, regulators, pension protection levy payers, company shareholders and debt holders, directors, senior management, former employees, pensioners and those still accruing scheme benefits. Employer covenant advice will be considered from the angles of ownership, industry, turnover, profit, CAPEX, cash flow etc. Scheme investment will be addressed from a risk, return and variation perspective, necessarily working from the scheme liability profile. Case studies will include publicly available data from as many high profile national and international reconstructions, regulatory interventions and insolvencies as possible. Likely cases include Sea Containers, Nortel, Jessops, UNIQ, Rover Cars, ITV, Kodak and Bonas. Anecdotes will be added from other smaller unpublished cases. The conclusions will simply be the lessons to be learned from the past with the opportunity being taken to highlight potential future developments.