Can we finance our pension fund with IP assets?
My CEO saw that Diageo has added whisky to its pension fund. He is keen to explore ways of plugging our own pension funding hole with non-traditional assets such as IP. What advice do you have?
You need to think about what both the trustees of the pension plan and the company are trying to achieve. The trustees will be looking for additional security so the asset needs to have a value if there is an orderly disposal of the business, or potentially if the company ceased to exist. They will consider what it is worth in these circumstances, rather than the value shown in the company accounts. This value is not easy to calculate even with more traditional assets such as property. If you are the trustee of the Marks & Spencer pension plan where a number of M&S shops have been provided as security, for example, what is the value of the shops if M&S no longer existed?
It is even harder to think about the value of IP if there is an orderly disposal of the business or the company...
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