Field “baffled” by TPR decision to drop Johnston Press investigation

Work and Pensions Committee chair, Frank Field, has lamented The Pensions Regulator (TPR) for ending its anti-avoidance investigation into the closure of the Johnston Press Pension Scheme.

Responding to TPR’s decision yesterday, 11 March, Field said it was “beyond baffling” to hear that TPR had dropped its case into Johnston Press, adding that there was nothing in the regulator’s report to explain why it had taken such a different view from the Pension Protection Fund (PPF) and the Committee.

In November, Johnston Press agreed a pre-pack deal which syphoned off the pension scheme from the business, just 48 hours before a £855,000 payment was due into the scheme.

Field said: “This nasty little trick of ‘pre-packs’ being used to bundle up a company bankruptcy and quietly jettison the pension scheme into the PPF has long been on TPR’s radar.

“The PPF raised the alarm straight off about the Johnston Press pre-pack, not least because its finances were in decent enough shape: they had some cash to put into the pension.”

The administrators subsequently sold the business and the assets to JPI Media Group for £181m a day after it entered into administration. The pension scheme is now set to enter the PPF with an estimated shortfall of £109m.

At the time of the deal, both the PPF and the Committee expressed concerns around its timing.

However, TPR found that the group had no “viable alternative” to enter into administration, and that the timing of the administration had not been “artificially engineered” to avoid a DRC of £885,000 into the Johnston Press Pension Plan.

“How TPR has decided there’s no avoidance case to answer is beyond baffling – and there’s no real indication in their report, nothing to explain away our and PPF’s deep concerns,” Field added.

The scheme, which had 4,771 members, had a buyout deficit of £305m as at 20 June 2018.

Trouble started for the firm the publisher after it raised £360m to repay existing debts, with repayment in full expected in June 2019.

However, trade deteriorated for the newspaper in March 2017 and it was unable to raise further funds from its stakeholders.

In July 2018, Johnston Press requested a regulated apportionment arrangement from TPR and the PPF, hoping to free themselves from their pension scheme, but it did not reach sufficient guidelines set by the PPF.

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