McColl’s bidder urged to engage with pension trustees

The trustees of the McColl’s pension schemes have written to the co-chief executive officers and chairman of EG Group, one of the leading bidders for McColl’s Retail Group, to ask the company to begin engaging with the trustees.

They have also written to the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy, asking the government to use whatever levers it can to ensure that members’ benefits are protected.

McColl’s, which has two pension schemes, the TM Pension Plan (TMPP) with 915 members and the TM Group Pension Scheme (TMGPS) with 1,170 members, appointed administrators last week.

“Any company looking to acquire McColl’s must do the decent thing and ensure that promises made to staff about their pensions are honoured,” a spokesperson for the trustee of the McColl’s pension schemes said.

“We would be extremely surprised if any organisation with an interest in demonstrating good corporate citizenship were to use a pre-pack administration to cease supporting the schemes, with absolutely no engagement with the trustees.

“It is a matter of great regret to the trustees that the current legislative framework for pensions appears unable to protect members' benefit entitlements in this situation.

“The schemes currently receive £1.75m a year from McColl’s in deficit recovery contributions, and are sufficiently well funded such that these payments are due to end next year.

“Therefore the cost to any bidder in taking on the schemes is negligible in the context of the value of the overall transaction, but would make an enormous difference to individual members of the schemes, who stand to lose out if the link to the company is lost.”

The schemes’ trustees have already put out a statement urging any potential bidders to respect the pension promises made to members and to not see to break the link between the schemes and the company.

The TMGPS is fully funded on a statutory ongoing funding basis and does not need any deficit recovery contributions, while the TMPP is expected to be fully funded on the same basis next year, at which point the current £1.75m annual deficit recovery contributions are expected to cease.

The TMGPS has a Section 75 deficit of less than £1m, while the TMPP has a Section 75 deficit of £15m.

Both schemes are fully funded on a Pension Protection Fund (PPF) basis, but will be subject to PPF assessment to establish whether the surplus funding is enough to buyout at benefits above PPF compensation levels.

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