Pension fund

A counterparty fraught with all sorts of complexity, fear, loathing etc, because it is looking after the retirement funds of grandmas and grandads around the world. This means that pension funds, and in particular their regulators, have the power to terrify counterparties at the mere crinkling of a brow.

• In the UK, the Pension Protection Fund can induce minor infarctions, and there is even a PPF Event Additional Termination Event to cater for it.
• In the US, the ERISA legislation is the key source of agitation, and there are screeds and screed of ERISA reps of all different shapes and sizes. Even say the word “ERISA” and you will induce hyperventilation in the more nervous kind of attorney. When an English lawyer speaks cavalierly about ERISA, her American colleagues are apt to cry “YOU HAVE NO IDEA WHAT YOU HAVE JUST DONE”.

Also, one of ISDA’s vaunted netting categories.

Pension Fund: A legal entity or an arrangement without legal personality (for example, a common law trust) established to provide pension benefits to a specific class of beneficiaries, normally sponsored by an employer or group of employers. It is typically administered by one or more persons (who may be private individuals and/or corporate entities) who have various rights and obligations governed by pensions legislation. Where the arrangement does not have separate legal personality, one or more representatives of the Pension Fund (for example, a trustee of a pension scheme in the form of a common law trust) contract on behalf of the Pension Fund and are owed the rights and owe the obligations provided for in the contract and are entitled to be indemnified out of the assets comprised in the arrangement.
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See also

• ISDA netting categories
• close-out netting
• ISDA Anatomy