Chair calls for swift action from regulator on Johnston Press sale
6 December 2018
The Chair of the Work and Pensions Committee, Rt Hon Frank Field MP, has written to the Pensions Regulator expressing serious concern about the possible 'dumping' of pension liabilities using a pre-pack deal.
- Letter from the Chair to the Chief Executive of The Pensions Regulator, regarding Johnston Press, dated 19 November 2018
- Letter from the Chair to the Pension Protection Fund, regarding Johnston Press, dated 19 November 2018
- Letter from the Pension Protection Fund to the Chair, regarding Johnston Press, dated 28 November 2018
- Letter from the Chair to Pre-Pack Pool, regarding pension liabilities, dated 29 November 2018
- Letter from The Pensions Regulator to the Chair, regarding Johnston Press, dated 3 December 2018
- Letter from the Chair to The Pensions Regulator, regarding Johnston Press, dated 5 December 2018
- Work and Pensions Committee
Pension liability 'dumping'
Johnston Press, a major owner of UK national, regional and local newspapers, filed for administration in November and was subsequently sold through a pre-pack deal—leaving the Pension Protection Fund to pick up the bill for its pension scheme, which has a deficit of around £305m on a buyout basis.
In a series of letters between Rt Hon Frank Field MP, the Pension Protection Fund, Pre Pack Pool Ltd and the Pension Regulator being published today, worrying details about the circumstances of the pre-pack deal are brought to light.
The Pension Protection Fund explains that it does not take issue with pre-pack administration in general, but does have concerns in cases where the process is misused to "dump" liabilities, including pension schemes.
In the case of Johnston Press, it says that it had been led to believe that "the group actually had more than adequate cash reserves"—including to pay the pension contribution of £800,000 due on 18 November, just two days after administrators were appointed. It has asked for evidence of a "burning platform" need for a swift pre-pack deal—and has seen none. It does not "understand why there was an apparent rush to complete the pre-pack administration".
The PPF has referred the case to the Pensions Regulator (tPR). tPR has told the Committee that its "enquiries are ongoing" and that it is still considering "whether further investigation of the rationale for the pre-pack may be warranted".
Chair's comments
Frank Field MP said:
"It doesn't take a genius to work out that a company that dumps its pensions liabilities just days before it has to put £800,000 into the pension fund might be up to no good. It's clear that the PPF, which is left to foot the bill, has serious doubts about this pre-pack deal.
The Pensions Regulator has promised to be quicker and tougher—now would be a good time to start."