THE PENSION PROTECTION FUND (PPF) has agreed to take on the pension scheme of architectural practice BDP in a deal which will save the company from insolvency.
In return for offloading the underfunded scheme, BPD is paying additional cash contributions and has committed to repay loan notes to the scheme over the coming years, Accountancy Age's sister publication Professional Pensions reports.
The lifeboat fund is also taking an equity stake, believed to be about worth a third of the practice which designed the revamped Aintree Racecourse and oversaw the refurbishment of Old Trafford football stadium.
Such deals are rare, but the PPF has brokered around 50 restructurings, including the UK Coal scheme as part of a complex restructuring earlier this summer (PP Online, 18 July).
The BDP scheme, which has been closed to new members since 2002 and future accrual in 2003, reported a deficit of £88.3m at its last triennial valuation in December 2011.
BDP said it had paid £24m into the scheme since it was closed and the deficit dwarfed BDP's annual turnover and market capitalisation.
In a letter to scheme members, BDP chief executive Peter Drummond said: "Unfortunately, the funding deficit of the scheme has worsened dramatically over the last few years, caused by economic and market factors and continued improvements in life expectancy."
Drummond said the board had reluctantly accepted there had been "no sustainable alternative way forward" other than the deal agreed with the PPF.
Once the scheme has been through PPF assessments, most members will see some fall in the value of their benefits. Members over normal retirement age will receive benefits in full but with less generous indexation than is provided by most schemes. Members below retirement age will receive 90% of benefits accrued up to a maximum of £31,380.
A PPF spokeswoman said protecting peoples' pensions remained the organisation's priority.
She said: "We are not here to help struggling companies walk away from their pension promises.
"On rare occasions, we will, alongside The Pensions Regulator (TPR), agree transactions which allow a company to continue to operate with the pensions scheme being taken on by the PPF. We do not enter such arrangements lightly and only agree them if the pension scheme receives more assets, or money, than it would have done through normal insolvency."
The PPF applies a set of principles to these cases which state that insolvency must be inevitable without their intervention and the fund must receive more through the restructuring than it would in an insolvency process such as administration.
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