The news that 200 insolvency practitioners have been reported to their
professional bodies for missing the 14-day deadline to inform the Pension
Protection Fund (PPF) of an insolvency, has left a bad taste in the mouth of the
Darren Toms, associate director for the Alexander Forbes Trustee Services,
flagged the situation up last week with representative body R3.
Toms said, even though IPs are legally obliged to report a pension fund that
may be in need of state aid, the crux of the issue lay in funds only coming to
light ‘months after the initial appointment’ of an insolvency practitioner to
run a failing company. The licensing chiefs for IPs have supported this view.
The situation has also caused the licensing bodies an administrative headache
because of the sheer volume of complaints.
‘Clearly it does clog up the system with a lot of complaints, and these are
not really misconduct matters,’ said David Kerr of the Insolvency Practitioners
The PPF puts away cash to pay out compensation in the event of a pension
scheme being wiped out after a business collapse.
Wayne Harrison, the IPA’s head of regulation, has been at the forefront of
efforts to resolve the issues for IPs struggling to find schemes in companies
they take on.
Harrison has said the PPF is putting the finishing touches to a search engine
which will allow IPs to immediately check whether a company has an occupational
scheme. He said: ‘The records tend not to be that great with an insolvent
company and it can take a long while to go through the banking book and identify
payments that have gone through to a qualifying scheme.
‘The primary objective is to maximise the return for the creditors and, if
possible, save the business, so the IP can uncover a scheme six, seven or eight
months down the line.’
In the current environment Harrison added it was ‘crucial’ for the PPF to be
informed when a company with a qualifying scheme went under.
The PPF has thrown up other related issues. Pension holders will have to
weigh up whether switching to a defined contribution scheme would be better in
the current insolvency climate.
Paul McGlone, principal and actuary at Aon Consulting, said: ‘For those high
earners in schemes where the sponsoring employer is at serious risk, the
opportunity to transfer out before insolvency is one that should not be ignored.
‘In general terms, the higher your deferred pension, then the bigger the
impact that insolvency could potentially have on you.’
Companies have also had to address their PPF commitments while staving off
the threat of insolvency. ‘For companies on the brink of facing insolvency these
additional levies would be a particular concern. It certainly is a significant
cost for many of our clients,’ said Mathew Boyle of law firm Dundas &
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children