Bradstock future in the balance.

Fears have been voiced for ‘Bradstock’ agreements, made between distressed companies and trustees of their underfunded pension schemes.

Such compromise deals accept the company will pay less than its full obligations to pension scheme beneficiaries in order to avoid liquidation.

In theory, such negotiations save jobs and can result in a better return for scheme members than if the company had gone bust.

But there are warnings that in the future trustees may bring down the axe on more companies by making impossible demands – believing that PPF gives beneficiaries a safety net.

Gary Cullen, pensions partner at Maclay Murray & Spens, said: ‘With the PPF in place, if you are a trustee and you can force a liquidation why would you accept, say, 10% from the employer under a Bradstock?’

The Tories were similarly alarmed. Last month David Willetts, shadow work and pensions secretary, warned of negative consequences if Bradstocks fell out of use.

He said: ‘Trustees have a new interest in pushing the company into bankruptcy because they can then make a claim on the pension protection fund. They are going to have much less interest than in the past in negotiating a compromise deal with the management – so-called Bradstock Agreements The new battle ground in corporate Britain is the pension trustee versus the management.’

But Cullen warned that rumours of Bradstocks’ death should not be exaggerated. He argued they would still be useful where pension scheme members would rather take a reduction in benefits than face unemployment.

He suggested Bradstocks could hold their own against the uncertain benefits of the PPF, which might not be the ‘white knight’ of common perception.

But the GMB described Bradstocks as ‘yet another loophole’ for companies to avoid pension obligations. ‘We have a feeling they are being used for companies not in danger of liquidation to reduce their pension obligations,’ said a spokesman.

The department for work and pensions said trustees would determine the number of compromise agreements, but added that it thought they would face fewer ‘difficult decisions’.


Bradstock agreements are a compromise settlement between a pension scheme in deficit and a company, where calling in the projected pension debt would force the company into liquidation. Experts say they are a relatively untapped source of work for accountants but their use is increasing.

That trend may end in April 2005, if pension fund trustees decide the PPF offers beneficiaries a better return than negotiated settlements.

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