The Pensions Regulator has revealed it has agreed a £74m settlement for the third pension scheme of thread manufacturer Coats Group Plc, and has now ceased regulatory action against the company.

It brings the total figure recovered throughout the anti-avoidance investigation to £329m, split across three pension schemes. The case has been outlined in a report published by the regulator, which has led to a positive outcome for more than 30,000 members.

In December 2016, the regulator announced its action had secured a payment of £225m from Coats, which secured member benefits for 27,000 members of the Coats Pension Plan (CPP) and the Brunel Holdings Pension Scheme (BHPS).

The third and final agreement has secured benefits for the 3,700 members of the Staveley Industries Retirement Benefit Scheme (SIRBS), which has an estimated deficit of £85m. Coats and the trustee for SIRBS have reached an agreement based on the September 2016 settlement offer which will include an upfront payment of £74m into the scheme, a change in the statutory employer to Coats Limited and a full (buy-out) guarantee from Coats covering the liabilities of SIRBS.

Overall, the settlements in the Coats and BHS cases have meant that the amount TPR has recovered for DB schemes using its anti-avoidance powers now exceeds £1bn. TPR executive director of frontline regulation Nicola Parish said: “The use of our powers in this case has led to an extremely positive outcome for pension savers and the group.

“The ongoing trading operations of Coats have improved and are sufficient to provide ongoing funding for the schemes. This is an excellent result for scheme members, bringing greater certainty that future benefits will be paid in full.

“Today’s report shows that even though our concerns about the funding of the schemes were enough to launch anti-avoidance action and issue Warning Notices, we maintained a strong working relationship with Coats and the trustee, allowing us to be flexible and achieve a fair resolution. We will not hesitate to use our Financial Support Direction powers where we see member benefits put at risk, even where the sponsoring employer is solvent.”

In 2013 and 2014, TPR issued Warning Notices setting out the case for exercising its Financial Support Direction power in relation to three DB schemes sponsored by companies within the Coats corporate group.

Pending the outcome of TPR’s case, Coats agreed to suspend intended payments to shareholders of the proceeds from the sale of its former investments.

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