In a report TPR outlines its anti-avoidance action against Coats, which has led to a very positive outcome for more than 30,000 members.
In December, TPR announced its action had resulted in payment of £255 million from Coats, helping to safeguard the benefits of approximately 27,000 pension scheme members in the Coats Pension Plan (CPP) and the Brunel Holdings Pension Scheme (BHPS).
Today’s report highlights a settlement for the third and final scheme in the investigation, the Staveley Industries Retirement Benefits Scheme (SIRBS), with 3,700 members and an estimated ongoing deficit of £85 million.
Coats and the trustee for SIRBS have reached an agreement based on the September 2016 settlement offer which will include an upfront payment of £74 million 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.
In light of this agreement TPR has agreed to cease regulatory action.
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 £1 billion.
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.
To read the full report click here
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