Pensions Regulator to scrutinise Pickfords pension deal
- 5 December 2012
- From the section Business
The Pensions Regulator will scrutinise a deal in which the Pickfords removal firm was bought out of administration, relinquishing its pension scheme.
The firm went into administration on 23 November and was immediately bought by two of its directors, trading as Pickfords Move Management.
The administrators, BDO, said the success of the deal had hinged on jettisoning the pension scheme.
Pickfords, which has traded for nearly 400 years, declined to comment.
BDO said the move had saved 900 jobs which might otherwise have been under threat.
"Moving Services Group UK Limited, which traded as Pickfords, had been adversely affected by the UK economic climate and was burdened by unsustainable pension obligations, which threatened the future viability of the business," the administrators said.
"With the transfer of the business to the new company, the unsustainable pensions obligation has been removed, allowing the business to move forward on a secure financial footing.
"This was the only option available to ensure the continued viability of the business and preserve jobs," BDO added.
Pickfords' pension scheme is thought to have 1,258 members, and may now have to be rescued by the Pension Protection Fund (PPF), which acts as a safety net for the members of insolvent schemes.
The PPF has been officially notified of the company's insolvency, and said it would take two weeks to see if the pension scheme's finances were dire enough to qualify for a rescue.
"We have received a notice from the company to tell us there has been an official insolvency," said a spokesman for the PPF.
A spokeswoman for the Pensions Regulator, one of whose roles is to stop firms dumping their insolvent pension funds on the PPF cheaply, declined to say what its attitude was to Pickfords, apart from stating: "We have spoken to the pension scheme trustees and the company; we have had conversations."
Pickfords went through a rapid sale and purchase, known as a "pre-pack" administration, in which a buyer is lined up before the company officially declares itself insolvent.
Such deals have been criticised in recent years by those who argue that they could favour existing management teams and secured creditors, such as banks, against the interests of unsecured creditors.
The regulator takes a close look at the circumstances of such deals, and has the power to direct that employers put more money into their schemes if it thinks they have been trying to dodge their obligations to fund the scheme properly.
Since 2009 the government's Insolvency Service has encouraged creditors to complain if they feel they have been disadvantaged by a pre-pack deal.
However, the Insolvency Service also points out that pre-packs can be advantageous to all creditors if a quick rescue of an insolvent company is needed.
David Gilbert, one of the administrators from BDO, stressed that the pre-pack at Pickfords was in fact the best possible result.
If the company had gone bust and closed down, the pension scheme would have had to be rescued by the PPF anyway.
"This outcome preserves all 900 jobs and prevents the demise of a 400-year old household name," he said.
"With this sale, the business can now move forward on a secure financial footing. Going forward, it will be business as usual at all sites, operating under the Pickfords name, and all contracts, moves and orders will be fulfilled," he added.
The PPF is now well on its way to becoming one of the biggest pension schemes in the UK
Since its inception in 2005, the PPF has now rescued 504 pension private-sector, final-salary, schemes with 145,000 members.
It is currently assessing a further 264 schemes for possible rescue, covering another 154,000 members.