Buying a business can mean buying a pension plan

Considering pension issues during the purchase or sale of a business can limit liability and save money.
By Mark Rowbotham
|CHRR, Guide to Pensions & Benefits|Last Updated: 03/15/2001

In the purchase or sale of a business, often the proper treatment of pension plans is overlooked. This may be short-sighted. In some cases, the assets and liabilities of a pension plan are as large or larger than the corporate assets that are the subject of a sale transaction. Regardless of the pension plan’s size, consideration should be given to the mixture of tax, pension, labour and employment law issues that a plan brings to the table. There is a potential for liability to both vendors and purchasers if such complexities are not carefully weighed during a sale transaction. This should be reason enough for everyone to ensure that pension issues are carefully considered.

Transactions generally fall into two main categories — either a sale of shares, or a sale of assets. This article will focus only on registered pension plans, as opposed to other forms of retirement or other benefit plans.