Work and Pensions Committee chair Frank Field has questioned the protections in place to ensure pension schemes are not being “dumped" onto the Pensions Protection Fund (PPF).
In a letter to The Pensions Regulator chief executive, Lesley Titcomb, published today, 19 November, Field questioned the “provisions” in place to ensure schemes are not being dumped at a cost to pensioners and levy-payers, following the news that Johnston Press Pension Plan is set to fall into the PPF.
Johnston Press announced the end of its formal sale process, as offers failed to deliver “sufficient value”, and its assets will now be taken over by a new firm, JPI Media.
Field wrote: “Why it was not possible to find a solution that would have avoided the pension scheme entering the PPF.
“It is difficult to understand why it is possible for JPI Media to acquire the business, no doubt in the expectation of generating a profit from it, but without taking any responsibility for its pension scheme.
“Do you consider that adequate protections are in place to prevent schemes being dumped on the PPF, at cost to pensioners and levy-payers?”
In July, the publisher considered a regulated apportionment arrangement (RAA) for its pension scheme as one of a number of “potential strategic options” or restructuring or refinancing of a £220m bond. The scheme reported a £47.2m deficit on 31 December 2017.
In a statement, trustees said: “Subject to these court approvals, the plan will enter into a PPF assessment period, and the trustees' belief is that the plan will ultimately transfer into the PPF.
“The trustees recognise that this is an unsettling time for members. Our priority now is to work with the administrator and the PPF to provide all possible assistance to members.”
Asking an urgent question in the House of Commons today, Labour MP Tom Watson questioned the government’s role in the takeover, after it emerged that JPI Media was set up in September.
Watson also asked whether TPR would be assessing the suitability of JPI Media, regarding the takeover.
In response, Secretary of State for Digital, Culture, Media and Sport, Jeremy Wright said he has spoken to David King, formerly chief executive of Johnston Press and now chief executive of JPI Media, who said the move was the best course of action for its staff.
He added that the situation will have an impact on employees and pension holders on the define pension scheme and they are working through what this will mean for around 250 current members of staff who are impacted.
“As far as I understand it [current pensioners] will not be affected, they will continue to be paid. The changes will affect those in current employment, which we believe to be 250 or so in total," he said.
According to PPF compensation measures, members of the scheme who retired early, or those that have still yet to retire, should receive compensation based on the PPF’s 90 per cent level, subject to a cap.