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Regulation

British Court Sides with TPR to Compel Company to Bolster Pension Plan

Upper Tribunal approves regulator’s power to require parent ITV to aid failed subsidiary Box Clever’s pension.

By Michael Katz

A top British court ruled that the nation’s pension regulator has the power to order a company to support the pension plan of a failed subsidiary.

The UK’s Upper Tribunal has sided with The Pensions Regulator (TPR) regarding the use of its Financial Support Direction (FSD) to compel corporate parent media company ITV to financially support the Box Clever pension plan, which has 2,800 members and a deficit of £115 million ($155.4 million)  The purpose of the FSD is to provide a rescue framework for pensions in deficit.

The judgment followed a two-week hearing in January, which was the first anti-avoidance case by TPR to be heard in full by the tribunal, according to the regulator. The TPR has so-called “anti-avoidance” or “moral hazard” powers that are intended to help protect pension members’ benefits; reduce the number of claims for compensation to the Pension Protection Fund (PPF), which is the UK’s pension lifeboat for collapsed companies; and reduce the PPF’s exposure if a claim is made.

The ruling “sends a clear message to companies linked with defined benefit pension schemes that we will not hesitate to use our anti-avoidance powers where we believe it is reasonable for them to provide financial support,” Mike Birch, TPR’s director of case management, said in a release. “We will pursue these cases for as long as necessary to protect pension savers and the Pension Protection Fund.”

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Box Clever was formed in 2000 as a joint venture between the TV rental businesses of Granada, which merged with Carlton Communications in 2004 to form ITV, and Thorn, which is now Carmelite. The respective employees were transferred to the new company and enrolled in the Box Clever pension plan, according to TPR.

TPR opened an anti-avoidance investigation following the collapse of Box Clever, and said that prior to the collapse, ITV received “significant value” from the joint venture.

“This has been a long and complex case, where the targets have raised numerous legal challenges causing significant delays in an outcome being reached,” said Birch. “We now hope that ITV will accept the Upper Tribunal’s findings and seek to work with TPR to put in place appropriate financial support for the scheme and deliver a good outcome for members.”

The Tribunal ruled that it is reasonable for ITV to provide financial support for the pension in the circumstances of the case. ITV has 14 days to seek permission to appeal the Tribunal’s decision. If there is no appeal, TPR’s determinations panel will issue financial support directions to ITV.

“By their choice of structure for the joint venture, the shareholders extracted considerable cash from the business with no risk of recourse to their assets,” said the Tribunal. “They retained an ongoing interest in the merged business with the possibility of further value being generated if the business was successful, but without having to bear any responsibility if the business, whose strategy they continued to determine, subsequently failed.”

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Home > News > Risk > Netherlands Metal Workers Pension Fund Pulls Investments in Coal
Risk

Netherlands Metal Workers Pension Fund Pulls Investments in Coal

Fund says its producers have a grim future as society abandons the fuel as an energy source.

By Chris Butera

Pensioenfonds Van De Metalektro has chosen to stop investing in coal emissions companies.

The $55.4 billion Netherlands-based pension fund, which covers the retirement benefits for metal workers, said that coal-only companies no longer have “future-proof operations.” This led to the decision to exclude the stocks.

“That is why we ask companies in which we invest to actively contribute to a reduction in CO2 emissions and a cleaner energy supply,” said Eric Uijen, the chairman of the fund’s executive board, in a statement.

Basing its beliefs on the Paris Climate Agreement, the metal workers’ pension expects that coal will eventually stop being used as a means of energy. It called investments in coal producers “stranded assets” in a news release, where it added that it makes “no distinction” between metallurgical coal (which creates heat for steelmaking) and thermal coal (which generates electricity).

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Metalektro plans to reduce the carbon footprint of all of its investments by 25% in 2021. It has been discussing its carbon dioxide stance with energy companies, particularly the top 10 carbon emitters, which exclude Exxon Mobil and Royal Dutch Shell. If the companies will not talk with the fund or do not meet its reduction requirements, they are placed on the fund’s exclusion list.

The fund also requires 10% of its portfolio across all asset classes to contribute to meeting the United Nations’ Sustainable Development Goals code. Pensioenfonds Van De Metalektro also does not invest in tar sand oil or tobacco.

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