Pensions deficits claim two victims
Two companies stave off collapse as pension deficits bite
Pension deficits have led two business to the brink of collapse.
Financial advisory group Berkeley Berry Birch and leather tanners Pittards
entered into proceedings to maximise returns for their pension members, as
deficits affected trading of the businesses.
Pittards has entered into a company voluntary arrangement, which allows the
company to benefit from its pension deficit of nearly £33m passed across to the
Pension Protection Fund. The company will be able to continue trading and
guarantees the safety of 230 jobs, and the PPF should give the company’s 2,000
pension members a 90% payout.
And in what is believed to be the first instance of its kind, BBB pension
trustees petitioned for the company to be entered into administration, managed
by PricewaterhouseCoopers, but avoid involvement with the PPF.
Trustee chairman Graham Pitcher said the tactic had been used to make sure
pension members would be a higher priority than if the company continued
trading, according to the Daily Telegraph.
If BBB can recover just 10p in the pound for its members, than it can
purchase an annuity and not use PPF.
Pitcher explained that the PPF only guaranteed their members a maximum
£25,000 payout, while the BBB scheme offered a 5% annual inflation indexing that
would be lost with the PPF.
BBB has a £13m pension deficit.